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Japan disaster: Recovery 'could take five years'

Japan may need up to five years to rebuild from the disastrous earthquake and tsunami that has caused up to $235bn (£145bn) of damage, the World Bank said in a report.

It also estimates about 0.5% was shaved from the country's economic growth this year.

However, it expects growth to pick up again in the second half of the year.

The 11 March earthquake and tsunami, disrupted production networks in the automotive and electronic industries.

"Damage to housing and infrastructure has been unprecedented," the World Bank said.

"Growth should pick up through subsequent quarters as reconstruction efforts, which could last five years, accelerate," it said.

The bank estimates the damage to be between $123bn and $235bn.
Knock-on effects

The World Bank also predicted that East Asia would be affected in a separate report.

"In the immediate future the biggest impact will be in terms of trade and finance," said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region.

Japan's north-east region, where the earthquake and tsunami hit, is home to ports, steel mills and manufacturers of auto and electronic components.

"Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems," the World Bank said.

The other worrying factor for the region is that about one-fourth of East Asia's long-term debt is denominated in yen.

For China it is only about 8% but for Thailand it is about 60%.

A 1% appreciation in the Japanese yen translates into about a $250m increase in annual debt servicing on the yen-denominated assets held by the nations, the report points out.

The region is expected to see less robust growth in 2011 as it fights inflation.

BBC News

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