Measuring the economic aftershocks
The Japanese will be counting the human cost of the earthquake for many years. But when the world's third largest economy suffers such a catastrophe, it's natural for economists to wonder about the economic impact - for Japan and for the world.
Like the implications for the nuclear industry, there is already a range of views about what those economic consequences will be.
In the short term, all agree that the disaster will hit Japan's output, conceivably tipping it formally into another recession. GDP shrank in the last three months of 2010. It is possible that output will now shrink in the first quarter of this year as well.
Everyone can also agree that the Bank of Japan will do all it can to prevent the Japanese currency rising in response to the crisis. Bonds fell after the Kobe earthquake in 1995, but the yen rose to a record high as the economy moved into deflation. The BoJ doesn't want that to happen this time.
We have already seen Japan's central bank inject an extra 15 trillion yen (£114bn;$183bn) into the economy this morning. It also offered to buy an additional 3 trillion yen of government bonds. This has helped to reverse the rally in the currency you saw in the early hours after the quake.
Finally, everyone agrees that the government will fund the vast majority of the reconstruction effort, almost certainly through some form of emergency stimulus programme, and that this is likely to boost GDP over the course of the next year or so. Chile's economy shrank by 1.3%, on a quarterly basis, when it had its earthquake a year ago. It grew by more than 4.5% the following quarter.
As I see it, there are two big imponderables on the economic front, which won't get resolved for some time.
First, will this ultimately, be deflationary for Japan, or inflationary? Some will consider it bad taste to raise the question. In years to come, few will want to say the disaster was good for Japan.
Nevertheless, as Robert Cookson and David Pilling point out in today's Financial Times, Japan has been trapped in its deflationary malaise for so long, officials have often talked in the past about the need for some kind of major economic shock to bring the country out of it. Even now, there are those who see this silver lining in the horrific events of the past few days.
Some say this misunderstands the economic impact of reconstruction. The national accounts don't show a fall in GDP when infrastructure is destroyed by a natural disaster - only the subsequent rise, when that infrastructure is replaced. In that sense, you can say the post-crisis rebound in GDP is a statistical artefact that "doesn't make anyone richer".
But, as the economist, John Maynard Keynes would have been the first to point out, there are times when digging up roads - or re-building them - can create more wealth than the earthquake destroyed. (In technical terms, when the fiscal multiplier is well over one.) That may well be true of Japan today.
The trouble is that the reconstruction effort must still be paid for, at a time when the government is already running a deficit of nearly 10% of GDP and the debt ratio is heading to 230% of national income. There was a lot more room for extra borrowing when Kobe was hit in 1995.
That brings me to the second question: does this raise the chances of a fiscal crisis in Japan? I am tempted to say yes - how could it not? But whether it increases them substantially depends on the broader macroeconomic impact.
As Robert Peston notes in his blog, global investors have been relaxed in the face of Japan's extraordinary funding needs, because the government doesn't need to rely on the global market to buy their bonds. The nation's desire to save is as large as the government's need to borrow (though household saving has also fallen since 1995).
Even another downgrade of Japan's bonds would not seriously endanger the government's ability to fund itself. But Japan is on uncharted ground. No developed country, in peacetime, has ever built up such a gargantuan debt to the future. In that sense, Japan is a test case and not a welcome one.
What does it all mean for the rest of the global economy? As I said at the start, this is all going to take time to play out.
It's a bad time for another surprise - either for the real economy or the financial markets. But if we're lucky, the long-term consequences at a global level will be more micro than macro, with certain sectors, such as the energy industry, affected more deeply than others. (I'm excluding here the possibility of a fundamental re-assessment of the costs and benefits of nuclear power, which would obviously have macro implications as well).
Short-term, global inflationary pressures will surely be a little stronger in 2011 than they would have been, due to the damage to Japan's energy supplies, and the short-term stimulus from reconstruction. Whether the long-term impact is deflationary or inflationary will depend, in large part, on the reaction of the Japanese people themselves.