![]() financial markets, interest rates, and the yen-dollar exchange rate. citizens and American companies in Japan, the effects on trade and supply chain disruptions, and increased volatility in Japanese and U.S. ![]() The net impact of the disaster on global GDP is that it is expected to shave about a half percentage point off global economic growth with about half of that effect confined to Japan, itself.Ĭongressional interest on the economic side centers on humanitarian concerns, radioactive fallout reaching the United States, the impact on U.S. As the third-largest economy in the world, Japan’s GDP at $5.5 trillion accounts for 8.7% of global GDP. Much depends on whether the damage from the nuclear plant can be contained, the speed at which electrical capacity can be restored, and how quickly Japan’s industrial base can recover. Japan’s economy has contracted for two quarters and essentially is in recession, but it may begin to expand later in the year because of rebuilding activity. Early data indicate that the economic damage is quite severe. The earthquake-related events in Japan are still unfolding, but each round of economic assessments seems more and more pessimistic. The negative effects of the earthquake and tsunami have been compounded by the continuing crisis at the Fukushima nuclear reactors the resulting evacuations, radioactive contamination, and shortages of electricity continuing aftershocks and the extensive damage to infrastructure, homes, manufacturing plants, and other buildings. (Greece’s GDP is $330 billion.) In excess of 23,000 persons in Japan are killed or missing, and more than 400,000 homes and other buildings have been totally or partially damaged. Physical damage has been estimated to be from $195 billion to as much as $305 billion. Japan has lost considerable physical and human capital. The March 11, 2011, earthquake and tsunami that occurred in Japan followed by the nuclear crisis are having a large negative impact on the economy of Japan but a lesser effect on world trade and financial markets.
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