Global Implications of the Japanese Earthquake

• In this paper we look at the economic effects and consider different scenarios for the Japanese nuclear crisis and the effects on the global economy.
• The main takeaway is that it will take a very substantial decline in Japanese GDP in order for it to have a material impact on global growth. The main threat to growth outside Japan stems more from falling markets than from lower exports to Japan.
• In any case, the effect is likely to be temporary as rebuilding will lead to a recovery of Japanese growth - even in a bad scenario.
• In the bad scenario we have assumed a wide scale emission of radiation hitting Tokyo. In this scenario Japanese growth is projected to decline close to 10% annualised in Q2, but to rebound gradually as rebuilding sets in. In this negative scenario the effect on global growth will be felt, but is still manageable and temporary.

Copyright Danske Bank