News Analysis: Experts divided on possible economic impact of Japan's catastrophic quake

08:33, March 14, 2011      

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The catastrophic quake and the ensuing tsunami that may claim more than 10,000 lives in Japan this week have raised concern about its grave economic consequences not only to Japan but to the world at large.

However, many economists shared the view that assessing the full economic impact is impossible for the moment, given that earthquakes and ensuing tsunami are still wrecking havoc.

"It is tough to know the extent of the damage and, therefore, also the cost," said Jim O'Neill, chairman of Goldman Sachs Asset Management.

IMMEDIATE AND ENSUING ECONOMIC LOSSES

Still, the damage to Japan's economy, the world's third largest, can be gauged mainly from two perspectives.

First, the catastrophe has inflicted direct damage on the industries clustering on the northeast coast, a region accounted for 8 percent of the country's gross domestic product(GDP).

Automakers took the brunt of shock. The quake had shut down 22 assembly plants in the areas, including the big three of Toyota, Honda and Nissan.

Secondly, the massive earthquake could disrupt the supply chain of the global market.

As a major player in chip manufacturing, Japan holds a key position in the supply chain of semiconductor equipment and materials.

With traffic clogged and transportation system crippled by the quake, manufacturers in Japan and elsewhere would be hit hard by supply shortages in the coming months.

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