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Q&A: The Economic Impact Of The Crisis In Japan

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Q&A: The Economic Impact Of The Crisis In Japan

Rebuilding Japan

Q&A: The Economic Impact Of The Crisis In Japan

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ROBERT SIEGEL, Host:

And we've asked David Kestenbaum of NPR's Planet Money Team to look into the economic impact of this disaster. And David joins us now from New York. Welcome.

DAVID KESTENBAUM: Thank you.

SIEGEL: We've heard several times that this is the greatest disaster since the end of World War II in Japan. We know it's a huge natural disaster. Is it a huge economic disaster?

KESTENBAUM: I mean, the region affected, just look at the numbers, is only 4 percent of the country's gross domestic product. And it's only part of that region that was affected. The main question mark that people raised at this point is the situation with the nuclear reactors over there.

SIEGEL: On the other hand, we've heard estimates that rebuilding could cost hundreds of billions of dollars. I've seen some people speculate that perhaps that kind of spending will amount to a huge public works construction project; a lot of roads and bridges and buildings being rebuilt - a stimulus.

KESTENBAUM: So they can borrow money at a very low rate right now. It does seem that when the time comes to rebuild, if they need to borrow the indications are that that will not be a problem for them.

SIEGEL: Japan, of course, is a major trading partner of the United States: electronics, cars. What would be the effect of all this on the U.S. economy?

KESTENBAUM: So what you might expect are some short-term disruptions. But long-term, these things tend to fix themselves surprisingly quickly.

SIEGEL: The most recent huge natural disaster in Japan was the Kobe earthquake of 1995. What were the economic consequences of that?

KESTENBAUM: But, you know, GDP doesn't measure lost buildings. It doesn't measure lost homes. It doesn't measure lost lives. There are awful lot of things that just do not show up in the economic data.

SIEGEL: Okay. David, thanks.

KESTENBAUM: Thank you.

SIEGEL: That's David Kestenbaum of NPR's Planet Money team.

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