2011-03-21 14:05

Tamane Mitsuko, a 60-year-old resident, prays outside her destroyed house in Otsuchi, Iwate prefecture March 21, 2011, after an earthquake and tsunami hit Japan on March 11. [Photo/Agencies]

SINGAPORE - The damage caused by the recent earthquake and tsunami that hit northeastern Japan could be up to $235 billion, the World Bank said in a report on Monday.

"While it is too early to estimate accurately, the cost of the damage is likely to be greater than the damage caused by the 6.9 magnitude Kobe earthquake in 1995," said the report The Recent Earthquake and Tsunami in Japan: Implications for East Asia.

The World Bank projected a damage ranging from $122 billion to $235 billion, or 2.5 percent to 4 percent of Japan's gross domestic product.

The Kobe earthquake in 1995 caused a damage of about $100 billion, or 2 percent of the GDP.

As a result of the catastrophe, Japan's real GDP growth will slow, but the slowdown will likely be temporary. Growth should start picking up after mid-2011 as reconstruction efforts get underway, the bank said.

"Clearly given Japan's importance in East Asia, the tragic events unfolding will be felt in the region. But it's far too early to give an accurate assessment of the likely damages," said Vikram Nehru, World Bank Chief Economist for East Asia and Pacific.

"At this stage, we expect the economic impact of this disaster on the East Asian region to be fairly short-lived. In the immediate future the biggest impact will be in terms of trade and finance. We expect growth in Japan will pick up as reconstruction efforts accelerate," he said.