Disaster could cost Japan $235 billion: W. Bank

SINGAPORE: earthquake and tsunami in Japan could cost the economy up to $ 235 billion, or 4.0 percent of production, and reconstruction could take five years, the World Bank warned Monday.
"If history is any guide, the real GDP growth will be affected by mid-2011," the Bank said in its latest East Asia and Pacific Economic Update report.
But growth should accelerate in the coming quarters, "the reconstruction efforts, which could take five years to accelerate," the statement added.
The lower end of the estimate of damages, based on projections by the Japanese government and the private sector as of March 17 was equivalent to 2.5 percent of gross domestic product (GDP), or 122 billion .
Moody's, in a special report said downside risks had risen over the last week of the Japanese economy, sovereign credit, banking, insurance, and non-financial firms.
World Bank regional chief economist Vikram Nehru said a nuclear power plant resulting from a paralyzed by disasters has complicated the situation and its impact will depend on how long it takes to solve the problem.
Nehru said that the Japanese yen, which surged to postwar highs against the U.S. dollar after the disaster, was to normalize after Japan and his colleagues in the G7 rich countries promised action to curb rise currency.
"A one percent appreciation in the Japanese yen resulted in an increase of 250 million in annual debt service on liabilities denominated in yen," said Bank.
A quarter of developing countries in the region have a long-term debt denominated in yen - up from eight percent in China to about 60 percent in Thailand, said the World Bank.
Reinsurance giant Swiss Re said Monday that the earthquake and tsunami that had cost $ 1.2 billion (847 million euros), but said the figure could be revised upwards.
U.S. billionaire investor Warren Buffett, however, said the disaster would not hinder the Japanese economy and may encourage the purchase of new shares.
"I'm not looking at the economic future of Japan 10 days ago differently ... offer extraordinary events (a) excellent buying opportunity," he said during a visit to South Korea. - (AFP)