Monday, March 14, 2011

Japan quake may be world's costliest disaster



The devastating earthquake and tsunami in Japan will rank among the costliest natural disasters on record, experts predict.

Japan's central bank announced plans Monday to inject a record 15 trillion yen ($183 billion) into the economy to reassure global investors in the stability of Japanese financial markets and banks. The Bank of Japan also earmarked an additional 5 trillion yen ($61 billion) in aid for risky assets in an effort to bolster market confidence shaken by the disaster.

Still, Japanese markets dropped sharply on Monday, the first trading day since the disaster. The benchmark Nikkei 225 was down more than 6.2%.

The drop was the largest single day fall since December 2008 during the financial crisis.

The disaster comes at a difficult time for the fragile Japanese economy, which slipped to the world's third largest behind China in 2010. Japan's export-driven business was hit by the financial crisis and a strong yen, which hurt profits from sales abroad.

The rebuilding from the quake also will add to Japan's towering load of public debt; it is nearly twice the size of its total GDP and the highest in the developed world. S&P downgraded Japan's long-term credit ratings in January, citing its high fiscal deficits. (read more)