Tags: Quake | Japan | Economy | World | damage

Quake May Hurt Japan's Economy, but Not World's

Friday, 11 Mar 2011 09:31 AM

The 8.9 magnitude earthquake that rocked Japan will spook investors there in the short term, but won't seriously affect global economic recovery, analysts say.

"We have seen massive earthquakes in Japan before. We know this is a very big one but nonetheless infrastructure is very different in Japan," Hans Redeker, Global Head of Foreign Exchange at BNP Paribas tells CNBC.

But the quake will shake up Japan's spending plans.

"The government was planning to go into fiscal consolidation and that is not going to happen because of this earthquake," Redeker says, adding the cost of rebuilding the country could run as high as 3 percent of Japan’s gross domestic product.

109948796.jpg
A road collapsed in the massive 8.9-magnitude earthquake.
"The question is whether Japan will reach debt levels which are unsustainable," Redeker says.

Concerns are arising over how much damage the Japanese economy can handle, Australia's Macquarie Research reports.

"There are two basic economics-related concerns. The first is that the fragile economic cycle is not in a position to withstand significant disruption," Macquarie says in a statement, according to Reuters.

"The second is that the combination of a softer economy and the additional strain on public finances will put upward pressure on bond yields."

Insurance companies saw their stock prices fall on the news.
Munich Re, Hanover Re and Swiss Re shares fell 5 percent in morning trade in Europe.

"It’s clear that it’s going to be another hit to confidence," Gilles Moec, senior European economist at Deutsche Bank, CNBC reports

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The 8.9 magnitude earthquake that rocked Japan will spook investors there in the short term, but won't seriously affect global economic recovery, analysts say. We have seen massive earthquakes in Japan before. We know this is a very big one but nonetheless infrastructure...
Quake,Japan,Economy,World,damage
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2011-31-11
Friday, 11 Mar 2011 09:31 AM
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