Japan is trying to calculate the financial cost of its worst catastrophe since World War Two.
Amid the aftershocks the economy shuddered as top-name Japanese manufacturers, including Sony, Panasonic and Toyota, shut down factories and Japan’s central bank rushed to bolster markets.
It will pump the equivalent of 131 billion euros into the financial system to make sure the economy has enough cash.
On Monday, the first full day of trading after Friday’s quake and tsunami, the benchmark Nikkei stock average fell six percent. Sony dropped nine percent and carmaker Nissan fell more than 9.5 percent.
The sell-off is set to continue as Shinichi Ichikawa, Chief Equity Strategist with Credit Suisse Securities, explained: “Nobody can know the real economic impact from this earthquake. So that’s why people, investors, want not to take any of the risks to invest in the equity market.”
The much less severe earthquake in Kobe in 1995 caused the Japanese economy to shrink by two percent.
The economic aftershocks from this one are predicted to be much worse given that oil prices and the yen are stronger and Japan’s government has much bigger debts that it did then.