Japan Blackout to Cut Domestic Growth by 0.29%, Nomura Says
Tokyo Electric Power Co.’s plans to implement rolling blackouts following Japan’s strongest earthquake on record may cut the nation’s gross domestic product by about 0.29 percent, according to Nomura Holdings Inc.
The power cuts, which may last until the end of April to pare a supply shortfall of 25 percent, may cut GDP contributions from the electric power industry in the Kanto region by 90 billion yen, wrote economists Takahide Kiuchi and Ryota Takemoto in a Nomura report today. While the direct impact from the sector is small, the ripple effects from the cuts on other industries may reduce nominal GDP by around 0.29 percent, the report said.
“Although we think these estimates could end up being on the high side, we would caution that power cuts are bound to have a negative impact on the Japanese economy,” Kiuchi and Takemoto wrote.
Workers battled to prevent a nuclear meltdown after a second hydrogen explosion rocked an atomic plant north of Tokyo, while officials said the death toll from the nation’s strongest earthquake may top 10,000 following the 8.9-magnitude temblor on March 11 and subsequent tsunami. Tokyo Electric Power, Asia’s largest utility, is flooding two reactors at the plant with water and boric acid to avert a catastrophic release of radiation.
A 25 percent cut in the power supply may hurt production in the manufacturing sector by 2.5 percent, 5 percent for the non- manufacturing sector and 10 percent for the financial, insurance, information and telecommunications sectors, the report said.
To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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