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Japanese quake costs may top $170 billion

This aerial shot shows a pleasure boat sitting on top of a building amid a sea of debris in Otsuchi town in Iwate.

TEXT OF STORY

STEVE CHIOTAKIS: Officials in Japan are trying to handle a disaster that's taken a huge human toll. Reports are more than 10,000 people may have died in Friday's earthquake and tsunami. The country's dealing with nuclear meltdown concerns after explosions ripped through a couple of reactors at a key nuclear power plant in the north. And then, there's the economics of it all -- how much it's going to cost to get back to some semblance of normal there.

The BBC's Chris Hogg is with us from Tokyo with the latest. Hi Chris.

CHRIS HOGG: Hello.

CHIOTAKIS: We're seeing the pictures of people suffering, and so many lives lost there. Do we have any idea of how much the clean up is going to cost?

HOGG: We don't yet. It's still far to early to say. I've seen estimates from different companies saying the losses could be about a $171 billion in total in the earthquake zone alone. That's not just for the clean up, but the economic losses too. Other people saying, probably much lower -- about $35 billion. But that would still make it one of the most expensive disasters ever. Second only, in fact, when you take inflation into account, to Hurricane Katrina.

CHIOTAKIS: What has the disaster, Chris, done to the global supply chain that goes through Japan. Has it delayed or stopped shipments of Japanese goods to places around the world?

HOGG: I think potentially it will. It probably hasn't quite yet. But you have companies like Toyota shutting down all their factories at the moment. Big Japanese manufacturers, electronics manufactures shutting down some of their facilities in the worst affected areas. One of the particular problems they've got is because of this nuclear crisis they're not generating enough electricity, so they're putting in place a system of rolling power cuts. They've started this evening in Tokyo. So that they say is going to go on not just for days, but for weeks. And that will cause further disruption.

CHIOTAKIS: What's the Japanese government, and the central banks response to the market that's very worried right now? We know the Nikkei dropped big time today.

HOGG: Yeah, a big fall from the Nikkei, around 6 percent. Economists I've spoken to about this say that basically, investors are just gambling at the moment because they just don't know how bad this is going to be. They don't know, for example, how bad are insurance companies going to be affected. How much of the losses is the Japanese government going to absorb. How much is going to go down to private insurers. The central bank, the bank of Japan, it has injected a lot of funds into the market to try to keep liquidity.

CHIOTAKIS: The BBC's Chris Hogg in Tokyo. Chris, thanks.

HOGG: You're welcome.

About the author

Steve Chiotakis was the host of Marketplace Morning Report until January 2012.

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