March 14th, 2011
12:38 PM GMT
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(CNN) - 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.

The TOPIX futures index halted trading around 9 a.m. for 15 minutes as trading quickly spiralled down. "The stoppage was a result of a circuit breaker mechanism, triggered "if shares fall beyond a specific range," said Andrew Wong of the Tokyo Stock Exchange.

Losses from the disaster will total at least $100 billion, including $20 billion in damage to residences and $40 billion in damage to infrastructure such as roads, rail and port facilities, catastrophe modeling firm Eqecat estimated, according to CNNMoney.

Another firm, AIR Worldwide, estimated that losses covered by insurance could reach between $15 billion and $35 billion from the earthquake alone, CNNMoney said. It did not estimate losses from the tsunami or the damage to the the Fukushima Daiichi nuclear plant in northeastern Japan.

"If claims come in at the middle of that range, the cost of the disaster would surpass all other natural disasters besides 2005's Hurricane Katrina," according to a Barclay's Capital research note released Monday. "Katrina losses cost the insurance industry around US$45 billion."

soundoff (2 Responses)
  1. Spock_rhp, Miami, FL

    1992 ... Hurricane Andrew flattened Homestead, Florida and South Miami. It destroyed tens of thousand of homes in an area about 40km wide by 25km deep.

    2011 ... this earthquake and tsunami have left similarly complete devastation in an area about 200km long by 10km deep.

    So yes, I'd expect property damage to at least double that of Hurricane Andrew, or Hurricane Katrina.

    Looking at the before and after satellite photos, it seems as if multiple square kms in Sendai alone are completely gone, along with everyone who was there at the time. Killed and missing will probably be on the order of 50,000 or more, not the 10,000 currently being reported in the press.

    Friday was a sad day for Japan and humanity. We've not seen worse since the genocide in Rwanda.

    March 15, 2011 at 12:39 am |
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