Last Friday, Japan was unraveled by, what may be termed as possibly one of the most horrible earthquakes ever. The subsequent 10-meter high tsunami trampled the whole of the Pacific coast of the country, sweeping away ships, vehicles, people, and homes alike. Though the early warning systems did reduce the chances of some loss of life, the death toll has now crossed 10,000, many are still missing, and thousands have lost their homes. The earthquake, measuring 8.9 on the Richter scale, has shifted the island by approximately 8 feet and is thought to have affected the earth's axis.
The Japanese Government is battling at so many fronts simultaneously that it is not really able to assess the exact level of destruction. The estimate, on the basis of the specifics received so far, is currently being pegged at an overwhelming $35 billion. The reconstruction efforts after this catastrophe are anticipated to be the greatest ever attempted in the world. The tsunami in Japan has been particularly responsible for cutting all the communication lines and power supplies in the earthquake-stricken areas. This, in turn, has resulted in even bigger concerns about the alleged nuclear radiations from the Fukushima Daiichii atomic plant. In addition to the irreversible damage to reactors No. 1 and 3, fresh fire at reactor No. 4 and an alarming rise in temperature at reactors 5 and 6 have given rise to worries over a probable meltdown of the fuel rods and the discharge of large-level radiations in the environment! Japan has total 54 nuclear setups that constitute 30% of its total electricity supplies. Eleven out of these, including the Fukushima reactor, are situated in the affected north-eastern belt and have been closed. Restoring these power sources is not likely to happen for some extended periods of time and this implies additional cost of moving over to oil-based electricity generation. The Japanese authorities are drawing criticism from the world community, due to mismanagement and suppression of actual information. The nuclear emergency in Japan is being rated 5, next only to the Chernobyl disaster of 1986, and currently, it is impossible to evaluate the costs on this account.
Japan is already full of a number of economic challenges and the latest events have been a major setback to its economic recovery process. All of the affected areas have been rendered totally non-functional, where trading of daily essentials is also suffering from a shortage of supplies. Though the commercial zones in Japan have not been directly affected by the earthquake and tsunami, production is now at halt in many parts. The transport industry is among the worst hit by the tsunami and there have been huge opportunity costs of lost production. Foreign employees are being evacuated, while auto majors, such as Honda, Toyota, and Nissan have stopped operations. There have been over 110 aftershocks to the Friday's earthquake until now, with the latest, 6.0 on Richter scale, to hit Tokyo on Wednesday. It is yet to be seen whether the current troubles subside or a fresh round of events throw Japan further out of gear.
Swati Sinha is a qualified Indian Chartered Accountant with strong industry experience. She is the director of Eurion Constellation, a combination of efficiency and effectiveness that brings out the best products, consultancy, and outsourcing services for you and your business, no matter in which part of the world you are. For more, log on to http://www.eurionconstellation.com.
