Japan recently underwent the 5th largest earthquake since 1900, a tsunami, and a crippling nuclear reactor. These events took a toll on Japan and caused an exacerbated amount of damage, which at the present time is preliminarily estimated to be in excess of 100 billion.
At the present time, it is believed that the Japanese economy will shrink but it is unsure whether it will impact or hurt the global economy and to what extent. The deeper the damage reaches within Japan the more likely that it will have a stronger economic crisis.
There are possibilities that the following will be impacted:
- Global supply chains: Production may be halted by production components produced in Japan.
- Oil: While the initial affect was a decrease in oil prices the reality is that oil prices will most likely be driven upward.
- Auto production: While auto production in Japan may heartlessly be moved to other countries hurting its own economy, it may help other countries who pick up the auto production.
All in all it is probably too early to assess the actual damage in Japan or the financial effect it will have on Japan, US or the global economy. According to Blackstone Advisory Partners they do expect major implications from the tragedy in Japan.
Right now, the human lives lost and those whose lives are in peril are at the forefront, with the structural damage and economic damage being secondary. Japan has not experienced something like this for 60 years and the primary challenge is coping with the human disaster and not the economic.
