Tags: Nomura Quake May Set Back Japans Recovery by Six Months

Nomura: Quake May Set Back Japan's Recovery by Six Months

Monday, 14 Mar 2011 12:15 PM

The impact on Japan’s economy from the strongest earthquake in the nation’s history will exceed that of the Kobe earthquake of 1995 and may set back recovery by six months, according to Nomura Holdings Inc.

The 8.9-magnitude temblor that hit off the coast of Sendai, north of Tokyo on March 11, and subsequent tsunami have affected road networks, power plants and other infrastructure over a wide area, Nomura’s chief economist Takahide Kiuchi wrote in a report dated yesterday. With the Kobe earthquake, the impact on Japan’s economy was shorter than expected, and higher production and port capacity in other regions helped economic recovery, the report said.

“The Sendai earthquake resulted in greater damage from a large tsunami over a wide area, probably resulting in more substantial destruction of infrastructure and distribution facilities including ports, roads and power plants,” Kiuchi wrote in the report. “As a result, we expect both the short- term negative economic impact and the positive impact of rebuilding demand” to be greater than the Kobe earthquake.

Japan’s economy “is now likely to take longer than we expected to exit its current lull. We had projected an April- June exit but now forecast July to September or possibly October to December.”

TEPCO Meltdown Possible

“The March 11 earthquake appears to differ from previous Japanese earthquakes in terms of the great loss of life and damage to property resulting from a large tsunami affecting a wide area, and the continuing concerns over radiation leaks at nuclear plants,” Kiuchi wrote.

Tokyo Electric Power Co. said today a meltdown is possible at its Fukushima Dai-Ichi No. 3 reactor where a hydrogen explosion occurred, injuring six workers. Asia’s largest utility is seeking to avoid meltdowns threatening at least two reactors at the nuclear power station. It lost power to cooling systems for the reactor core after the earthquake.

A 6.9-magnitude earthquake in Kobe, western Japan, killed more than 6,000 people in 1995, while the 7.9-magnitude Great Kanto Quake of 1923 destroyed 576,262 structures and killed an estimated 140,000.

A separate Nomura report said the Nikkei 225 may fall and rebound in a range from around 9,500 to 10,000, and the broader Topix Index may range between 850 to 900 because damage from the earthquake will be greater than initially anticipated.

“Although we expect this earthquake to provide further impetus to the correction in Japanese equities that has been occurring since mid-February, we do not envision a serious correction,” because industrial production only fell in the immediate month after the 1995 Kobe earthquake, the government is likely to provide fiscal support and there is little risk of a sharp increase in the value of the yen, Nomura strategists including Seiichiro Iwasawa wrote in a report dated yesterday.

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The impact on Japan s economy from the strongest earthquake in the nation s history will exceed that of the Kobe earthquake of 1995 and may set back recovery by six months, according to Nomura Holdings Inc. The 8.9-magnitude temblor that hit off the coast of Sendai, north...
Nomura Quake May Set Back Japans Recovery by Six Months
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2011-15-14
Monday, 14 Mar 2011 12:15 PM
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