New blast in Japan amid warnings of economic impact
Auto Insurance Quotes Compare: New blast in Japan amid warnings of economic impact
There has been a new blast at the nuclear reactor at the Fukushima Daiichi plant as warnings are issued about the economic impact of the crisis.
Current estimates suggest more than ten thousand fatalities, making this worse than the Kobe earthquake in 1995 and in the words of Japan's prime minister, Naoto Kan, "the worst crisis since the second world war".
Keith Wade, chief economist at Schroders, said comparisons with Kobe were inevitable, but although Sendai is seen as more remote and of less economic significance, the latest event could end up having more of an economic impact.
He said: "The tsunami means that the destruction has been more intense requiring greater reconstruction spending.
"Meanwhile, the impact on power supplies will spread the effects through the economy more widely.
"The potential meltdown of a nuclear reactor adds a further chilling dimension."
Mr Wade said the typical pattern of activity in an economy after such a shock is a V-shape - a sharp fall in gross domestic product (GDP) followed by a rebound as reconstruction begins.
He said: "The expectation is a loss of around 1 per cent to 1½ per cent of GDP in the spring quarter with industrial production bearing the brunt of the adjustment.
"However, this would then be offset by increased reconstruction spending in the second half of the year and through into 2012."
Mr Wade said the key questions for investors at this stage is whether Japan can afford to fund the extra spending needed, put at between ¥5 to ¥10trn (£38bn).
He said: "After the Kobe earthquake the yen appreciated as insurance companies repatriated funds, preferring to sell overseas rather than domestic assets.
"The same could happen again and poses a risk to Japan’s economy which remains very dependent on export growth.
"On equities, the quake is clearly negative in the near term and in company accounts the loss of a company’s capital stock does register.
"Some will have been quite literally wiped out.
"Recent falls have been severe and it is difficult to make short run predictions, more generally though the equity market is on an attractive rating and prior to the shock had been enjoying a minor renaissance in generating investor interest."
source: Auto insurance quotes, Get auto insurance quotes, Compare auto insurance, Auto insurance comparisons, Auto insurance quote, Instant auto insurance, Affordable auto insurance, Auto insurance companies, Auto insurance rates, Auto insurance discounts, Auto car insurance, Student auto insurance, Auto insurance brokers, General auto insurance, American auto insurance, Auto insurance UK, Auto insurance claims, Fake auto insurance, Auto insurance complaints
