The disaster in Japan threatens to significantly impede the nation’s economic recovery, perhaps spreading to other nations, say economists.
The worst devastation from the earthquake and tsunami is concentrated in the northeast of Japan, but the economic effects of the earthquake and tsunami could expand further. On Tuesday, Japan’s stock market took its worst dive since the fall of 2008. Global companies, such as Toyota, have halted significant portions of their output.
Already, collapsed nuclear plants are weakening Japan’s energy supply, and power outages have hit manufacturers. With infrastructure and factories destroyed, major automotive and technology companies have frozen exports. As the world’s economies still struggle to emerge from the recession, sectors that have been major drivers of global growth now face massive stalls.
The full impact of the disaster, and the extent to which it could harm economies globally, cannot yet be assessed, experts say. In economic terms, the tragedy might not have much effect on other countries, as companies compensate for devastated facilities, say economists. But even once the crisis subsides and Japan begins to rebuild, that country’s economy could face major challenges.