OSAKA (AFP) – Japan on Wednesday said the cost of the March 11 earthquake and tsunami could hit 25 trillion yen ($309 billion), double the Kobe quake and nearly four times more than Hurricane Katrina.
The total cost from collapse or damage to houses, factories and infrastructure such as roads and bridges was estimated at 16 to 25 trillion yen over the next three fiscal years, the Cabinet Office said.
The estimate does not account for wider issues such as how radiation from the stricken Fukushima nuclear plant crippled by the quake will affect food and water supply, amid a deepening food scare.
Even so, with the cost of the destruction set to push down growth in the coming fiscal year, the upper estimate would put the disaster’s monetary impact at more than double the 9.6 trillion yen of the 1995 Kobe earthquake.
In 2006 the US National Hurricane Center calculated the damage from Hurricane Katrina, which a year before had hammered New Orleans, at $81 billion.
Japan’s estimate covers seven prefectures including the hardest-hit areas of Iwate, Miyagi, and Fukushima, as well as Hokkaido, Aomori, Ibaraki, and Chiba. The three hardest-hit account for up to 23 trillion of the total.
“The damage is far bigger than the Kobe quake,” Japan’s economy minister Kaoru Yosano told a press conference, adding “it will take a long time to complete reconstruction.”
The damage could hit Japan’s growth by as much as 0.5 percent, although economists expect Japan’s biggest reconstruction effort since World War II to give the economy a lift in the second half.
Analysts including those from Credit Agricole and Capital Economics have slashed growth forecasts for Japan to near zero for the 2011 financial year as the scale of destruction continues to emerge.
“The Japanese economy as a whole managed to shrug off the impact of the Kobe earthquake in 1995,” said Capital Economics in a research note.
“However, this time it?s different: the recent disaster has had national effects and the blow to confidence could severely curtail any rebound.”
Japan has said it is mulling the idea of establishing a reconstruction agency to oversee the rebuilding effort. The Bank of Japan has pumped in record funds, around 40 trillion yen, to stabilise financial markets.
Hundreds of thousands have been made homeless by the 9.0-magnitude quake and the devastating tsunami it unleashed, which erased whole towns.
The confirmed death toll from the disaster rose Wednesday to 9,408, and Japan holds little hope for 14,716 officially listed as missing.
Yosano warned that production has stagnated after the quake with plants forced to idle due to power shortages.
The disaster shattered transport systems in the northeast and has meant production shutdowns at Japan’s top companies such as Toyota due to damaged facilities, rolling power outages and broken supply chains crucial to making cars, electronic gadgets and machinery.
Japan grew 3.9 percent in 2010, but ceded its spot as the world’s second-biggest economy to China. It contracted in the fourth quarter.
Analysts had expected the economy to rebound in January-March with a global recovery lifting Japan, amid a recent pick-up in output and exports, but the quake-enforced production shutdowns have thrown that into doubt.
Before the disaster, the government had expected gross domestic product to increase 1.5 percent on a real term basis in fiscal 2011.
But the quake and tsunami have plunged Japan into what Prime Minister Naoto Kan has called its worst crisis since World War II.
A mammoth rebuilding task will be required in its aftermath but Japan faces a huge challenge in financing it without expanding a public debt that is already the industrialised world’s biggest at around 200 percent of GDP.
The nation’s credit rating was recently downgraded on concerns that not enough was being done to address the debt.