TOKYO – Japan’s government said Sunday it expects a “considerable” economic impact from a huge earthquake and tsunami that plunged the nation into what the prime minister called its worst crisis since the Second World War.
Economists say it is still too early to assess the full cost of the destruction from the record 8.9-magnitude quake and the 10-metre wall of water that laid waste to the northeastern coast and triggered an atomic emergency.
The official death toll so far is 1,200, but is certain to rise substantially, with one hard-hit prefecture saying as many as 10,000 could be dead.
“The quake is expected to have considerable impact on a wide range of our country’s economic activities,” Chief Cabinet Secretary Yukio Edano said.
Leading risk analysis firm AIR Worldwide said the quake alone would exact an economic toll estimated at between $14.5 billion and $34.6 billion, without taking into account the effects of the tsunami.
The Bank of Japan plans to pump “massive” funds into markets on Monday in a bid to help them stabilise following the linked disasters, Dow Jones Newswires said late Sunday.
Tokyo’s benchmark Nikkei index is meanwhile expected to tumble, with the index possibly breaking the psychologically important 10,000 level.
The quake and tsunami have damaged or closed down key ports, although airports such as Tokyo’s Narita have since reopened. Transport infrastructure such as train lines and roads have been crippled along parts of the northeast.
Many top Japanese firms have said they are suspending operations. Automakers Toyota, Nissan and Honda have announced the total suspension of production in Japan until at least Monday.
Sony Corp suspended production at its six plants in Miyagi Prefecture, which was hard hit by the quake, and neighbouring Fukushima Prefecture, it said, adding it has evacuated all employees there.
On Sunday Mitsubishi said it would halt production at all three of its domestic plants on Monday and Tuesday. Suzuki motors also said it was suspending all domestic plant operations Monday.
The immediate prospects for Japan’s atomic power industry are a key concern following a radioactive leak and an explosion Saturday at the ageing Fukushima No. 1 atomic plant located 250 kilometres (160 miles) northeast of Tokyo.
Japan’s nuclear industry provides around a third of the nation’s power needs, and the shutdown of reactors will lead to a shortfall in electricity supply that will make power outages necessary, the government warned.
Millions are already without electricity, and Prime Minister Naoto Kan said Sunday he had authorised a nationwide programme of planned power cuts to prevent any sudden major supply disruption. He appealed for public understanding.
Kan said the supply situation is “extremely severe” following Friday’s disasters, adding that he authorised the outages to prevent an unscheduled power cut that could cause enormous damage to people’s lives and the economy.
“This was a difficult decision I had to make, to impose great inconvenience on people,” he said in a televised address.
TEPCO, the operator of the quake-hit Fukushima No. 1 plant, said the outages would last until the end of April, Kyodo News reported.
Its shares are expected to plunge when the Tokyo stockmarket opens Monday, with MFGlobal describing them as expected to take a “horrible hit”.
The Nikkei ended 1.72 percent lower on Friday at 10,254.43, its weakest level since Jan. 31, as the late afternoon quake, felt throughout the Tokyo area, exacerbated pre-existing negative sentiment.
“Manufacturers with production facilities that have been affected by the quake, including carmakers Toyota Motor, Nissan Motor and Honda Motor may see the biggest impact from the initial selling,” said Investrust CEO Hiroyuki Fukunaga.
The Bank of Japan on Friday said that the two-day policy board meeting previously scheduled for Monday and Tuesday would now be cut short and conclude on Monday, seen as a sign it may quickly implement extraordinary measures.