Emergency stimulus

11 March 2011 By Ian Campbell

The economic impact of the earthquake near Japan is not yet quantifiable. Other Pacific nations are at risk from a tsunami too. But as Japan loses some output and spends to rebuild, the quake is likely to raise demand for commodities and food, and drive Japan’s debt still higher.

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An 8.9 magnitude earthquake, the most powerful since Japan began keeping records 140 years ago, struck the country's northeast coast on March 11, triggering a 10metre high tsunami. Domestic media said the death toll was expected to exceed 1,000, most of whom appeared to have drowned. Many other Pacific nations have issued tsunami warnings.

The British Geological Survey said the earthquake was the sixth largest recorded since seismographic records began in 1900.

The earthquake caused falls in equity markets. MSCI's allcountry world index of global stocks dropped to a fiveweek low. Oil prices fell by more than $3 a barrel, with the price per barrel on the New York Mercantile Exchange dropping slightly below $100.

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