Japan Macro Flash: Tentative Estimate of the Macroeconomic Impact

Total damage could match that of the Great Hanshin Earthquake — It may be too early to discuss how much damage was done to housing and infrastructure, but we suspect it could match that of the Great Hanshin Earthquake in 1995. We estimate that the total damage to housing alone may reach several trillion yen. Roughly speaking, combined with damage to infrastructure (roads, railroads, ports and so forth), the total damage may go as high as ¥5-10tn

Earthquake to strongly depress near-term economic activity — Gross prefectural production of four prefectures particularly hard hit by the earthquake/tsunami combined has a 6.2% share of nationwide gross production. Regarding manufacturing production, the four prefectures account for a higher 7.2% share. If we assume that the production level of these prefectures declines by an average of 20-40% for the remainder of March, industrial production in the month would be dragged down by 1.0-2.0%. If a rolling blackout continues, it appears quite difficult for the production level to normalize soon.

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