Japan may need five years to rebuild from the catastrophic earthquake and tsunami that has caused up to $235 billion of damage, the World Bank said today.
The March 11 disaster which killed more than 8,600 people and left more than 12,800 missing, and ravaged northeastern Japan will likely shave up to 0.5 percentage point from the country's economic growth this year, the bank said in a report.
The impact will be concentrated in the first half of the year, it said. "Damage to housing and infrastructure has been unprecedented," the World Bank said. "Growth should pick up though in subsequent quarters as reconstruction efforts, which could last five years, accelerate."
The bank cited damage estimates between $123 billion and $235 billion, and cost to private insurers of between $14 billion and $33 billion.
It said the government will spend $12 billion on reconstruction in the current national budget and "much more" in the next one.
It said a crippled nuclear power station in the northeast that authorities are racing to regain control of is an unfolding situation that poses uncertainties and challenges. Traces of radiation first detected in spinach and milk from farms near the nuclear plant are turning up farther away in tap water, rain and even dust.
In all cases, the government said the radiation levels were too small to pose an immediate risk to health. A short-term drop in Japan's consumer demand and manufacturing production will also hurt trade with regional neighbours, the bank said. South Korean electronics companies have seen the price of some memory chips from Japan rise 20 percent because of disrupted production, while Thai car exporters may run out of Japanese auto parts next month, it said.
"Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems," the bank said. "Japan is a major producer of parts, components and capital goods which supply East Asia's production chains." Japan's northeast, the epicentre of the disaster, is home to ports, steel mills, oil refineries, nuclear power plants and manufacturers of auto and electronics components. Many of those facilities have been damaged, while nationwide power shortages have severely crimped auto and electronics production.