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Japan disaster: Recovery 'could take five years' | Japan disaster: Recovery 'could take five years' |
(about 4 hours later) | |
Japan may need up to five years to rebuild from the disastrous earthquake and tsunami that has caused up to $235bn (£145bn) of damage, the World Bank said in a report. | Japan may need up to five years to rebuild from the disastrous earthquake and tsunami that has caused up to $235bn (£145bn) of damage, the World Bank said in a report. |
It also estimates that 0.5 percentage points will be shaved from the country's economic growth this year. | |
However, it expects growth to pick up again in the second half of the year. | However, it expects growth to pick up again in the second half of the year. |
The 11 March earthquake and tsunami, disrupted production networks in the automotive and electronic industries. | The 11 March earthquake and tsunami, disrupted production networks in the automotive and electronic industries. |
"Damage to housing and infrastructure has been unprecedented," the World Bank said. | "Damage to housing and infrastructure has been unprecedented," the World Bank said. |
"Growth should pick up through subsequent quarters as reconstruction efforts, which could last five years, accelerate," it said. | "Growth should pick up through subsequent quarters as reconstruction efforts, which could last five years, accelerate," it said. |
The bank estimates the damage to be between $123bn and $235bn. | The bank estimates the damage to be between $123bn and $235bn. |
This is the equivalent of between 2.5% and 4% of the country's economic output in 2010. | |
Knock-on effects | Knock-on effects |
The World Bank also predicted in a separate report that East Asia would be affected. | |
"In the immediate future the biggest impact will be in terms of trade and finance," said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region. | "In the immediate future the biggest impact will be in terms of trade and finance," said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region. |
Japan's north-east region, where the earthquake and tsunami hit, is home to ports, steel mills and manufacturers of auto and electronic components. | Japan's north-east region, where the earthquake and tsunami hit, is home to ports, steel mills and manufacturers of auto and electronic components. |
"Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems," the World Bank said. | "Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems," the World Bank said. |
The other worrying factor for the region is that about one quarter of East Asia's long-term debt is denominated in yen. | |
For China it is only about 8%, but for Thailand it is about 60%. | |
A 1% appreciation in the Japanese yen translates into about a $250m increase in annual debt servicing on the yen-denominated assets held by the nations, the report points out. | A 1% appreciation in the Japanese yen translates into about a $250m increase in annual debt servicing on the yen-denominated assets held by the nations, the report points out. |
The region is expected to see less robust growth in 2011 as it fights inflation. | The region is expected to see less robust growth in 2011 as it fights inflation. |