Japan crisis spells jitters for global economy

WASHINGTON, (AFP) -Experts are cautiously optimistic that the still-brittle global economy can absorb the shock of Japan’s triple disaster, but major risks still loom as the crisis unfolds.

As Japan has been ravaged by an earthquake, tsunami and nuclear emergency, economists have appeared confident the world’s third largest economy will bounce back and that damage to the global economy will be limited.

Many, like Nariman Behravesh, an economist at US-based IHS, predicts a "large, but -- probably -- temporary impact on the Japanese economy," and a "small impact on the rest of the world."Using previous catastrophes like the 1995 Kobe earthquake as a reference, they expect quake-struck businesses to eventually reopen.

Meanwhile tens of billions of dollars will be spent rebuilding homes, factories and infrastructure, sparking a recovery boom.

That process, they hope, will be replicated in Japan’s links with the world.

"Japan’s most important trading partners -- Australia, China -- will see both the most important near-term drag, and the largest medium-term benefit," said Societe Generale’s Michala Marcussen.

The prospect of quick economic recovery will be little consolation for the millions whose lives have been turned upside down by the disaster, but will offer some solace for those across the globe who are already worried by high unemployment and rising prices.

But as the crisis rumbles on, there are increasing warnings about how spillovers could be felt by consumers and economies across the globe, even without a catastrophic nuclear meltdown.

The most immediate problems are being felt in the manufacturing sector.

Japan has long ceased to be the world’s factory -- surpassed by China, Indonesia and a host of other emerging countries -- but it is still a crucial part of the global supply chain for everything from cars and computer parts.

With 11 nuclear plants shuttered and blackouts predicted until the end of April, a slowdown in Japanese production could quickly turn into a manufacturing bottleneck.

"People will be surprised by how fast prices will rise," Jesse Toprak, an auto analyst with TrueCar.com told AFP.

Toprak predicted that shuttered production could push up the cost of Japanese cars by around $1,000 dollars for some US-sold models by next week, as dealers cut discounts in the face dwindling supply.

"A lot of this inventory won’t last more than a few weeks, if that," Toprak said, citing already high demand for fuel-efficient Japanese vehicles like the Toyota Prius.

Meanwhile production on non-Japanese cars could be slowed by a parts shortage.

"Most vehicles that are made the United States have at least one component if not more that comes from Japan," he said.

Japan won’t need G7 FX move, govt share buying-Yosano

TOKYO, (Reuters) - Japanese markets have not become destabilised enough to warrant joint G7 currency intervention or government purchases of shares, Economics Minister Kaoru Yosano said, stressing that the damage from last week’s devastating quake to the country’s economy would be limited.

"I don’t think stock and currency markets are in a state of turmoil," Yosano said, when asked whether the G7 advanced nations should jointly intervene in the currency market to stem yen rises.

"We would like to get psychological support from the G7," he told Reuters in an interview on Thursday.

Group of Seven finance leaders are expected to hold a conference call this week to discuss the global market fallout from the 9.0-magnitude earthquake that hit northeast Japan last Friday.