Earthquake jolts crisis-ravaged Japanese economy

Today's devastating quake has dealt another blow to the ailing Japanese economy, already faced with mounting debts and falling exports.

Though it's early to estimate the losses from the massive earthquake and tsunami, the catastrophe is expected to put intense strain on Japan's economic resources.

This is the latest of the reverses hitting the world's third largest economy in recent weeks, after political uncertainty and more than expected economic contraction in the 2010 December quarter.

"This is a big disaster. Japanese economy has not been doing well...and (the calamity) is going to have a pretty strong impact on the Japanese economy," global consultancy Deloitte in India's Principal Economist Shanto Ghosh said.

In the developed world, Japan's debt burden is among the highest and is pegged at around 200 per cent of its yearly economic output.

The island nation is prone to natural disasters and going by reports, the Kobe earthquake of 1995 had resulted in a loss of over 10 trillion yen for the Japanese economy.

"Obviously, today's disaster will have a huge strain on the country's resources," Ghosh noted.

The export-oriented economy shrank more than expected at 1.3 per cent in the last three months of 2010 as compared to the earlier projection of 1.1 per cent.

Despite unprecedented measures including massive stimulus packages, Japan continues to nurse the deep wounds inflicted during the global financial crisis of 2008-09.

The turmoil had rattled the national economy, which is beset by the problem of an ageing population.

The domestic currency has been on the rise adversely impacting exporters as their wares are becoming less attractive in the international markets.

Bogged down by high debt, the country might also find it challenging to make borrowing arrangements to meet expenses related to the present disaster.

Japan, which remained the world's second largest economy for over four decades, was toppled from the spot by China last month.

IT software majors Infosys and iGate, which have operations in Japan, today said all their employees are safe. "Following the massive earthquake and resultant Tsunami that hit Japan earlier today, we are relieved to inform you that all our employees in Japan are safe," Infosys said in a statement.

Infosys has an office in Tokyo and several employees in the cities of Fukuoka and Nagoya.

"Our local teams in these cities are making arrangements to support our employee's requirements at this time," it said. Infosys began its Japanese operations in 1996 and opened its office in Tokyo in 1997.

The company currently has over 250 employees (including deputed employees) in Japan. iGate, which has an office in Yokohama and an overall employee base of over 100 in Japan said, "No one was injured and it was business as usual for all the employees in Japan" "Both employee interest as well as client work remained unaffected today", a company statement said.