Michael Heise: By far the worst effects of the earthquake are the horrible losses suffered by the people of Japan: the loss of life, the destruction of resources and infrastructure in the affected region, the loss of personal property and assets. However, the upturn of the world economy is not threatened by the earthquake in Japan. Losses in production and so in economic growth are only expected in the short-term, as long as there is no nuclear disaster. The biggest risk for the world economy remains an increase in the price of raw materials.
Why did financial markets react so negatively?
Heise: The financial markets have a lot to deal with at the moment: there is still a debt crisis in Europe and there are revolutions in North Africa, which have contributed to a rise in oil prices. Every additional negative event – such as the earthquake in Japan – increases uncertainty in the markets and that means a higher risk of dramatic market reactions.
And if there should be a nuclear disaster?
Heise: As long as a nuclear disaster is avoided, massive investments in reconstruction will stabilize and boost economic recovery in the coming years. However, a nuclear disaster would trigger a downturn of the Japanese economy, which could even have a significant effect on countries bordering the world's third biggest economy. A major crisis in Japan would put the brakes on important economies in Asia. Above all, the psychological consequences of a nuclear disaster could be considerable.
