The economic effect of fukushima nuclear power disaster - Essay Example

Global economic impact of Fukushima nuclear power disaster Dubbed as worst than the 1986 Chernobyl accident, Fukushima nuclear disaster, as it was happening, was being taken as one that would have far-reaching and long-lasting economic impact globally. In the economist’s language the disaster of this magnitude is always expected to transmit a ‘confidence shock’ throughout the world that has profound impact on its economy. Even though the disaster is still only five months old, the ripples of economic impact have already been felt globally; particularly in Asia Pacific region which has more than half of world’s nuclear power plants.

Nuclear power industry thus comes under a direct impact of the crisis that Fukushima disaster has induced on the same (McNeill, 2011). The immediate and direct impact, however, was felt in Europe, which ordered temporary closure of its nuclear stations in Germany built before 1980s. It is estimated that the power stations shutdown generated 7% of the power there. The sudden closure led to an unexpected and a momentous loss to this country’s power sector (Elliot, 2011). The Fukushima disaster has only added to the woes on world economy, majorly in countries which are direct trading partners with Japan, due to an already-existing cloud of uncertainty on account of situations in Middle East and North Africa.

While the disaster’s full-scale assessment of the global economic impact must be underway, but it has led to unprecedented dent in Japan’s supply chain with its trading partners across the globe. The nuclear disaster has rendered Japan short of power, which has affected it vital industries like consumer electronics and automobiles for which Japan has been known as a reliable business partner. The disaster has shaken the International Atomic Energy Agency (IAEA), which has woken up to the comprehensive review of the safety of nuclear power plants.

The recommendations that will be, will entail huge expenditures when implemented. Since the safety standards and the risk of such disasters in nuclear plants have suddenly been highlighted by Fukushima disaster, it would call for extra insurance coverage, which means an escalation in the insurance cost, stringent terms and higher premiums. Earlier on, it had been estimated that Fukushima disaster would slice around 0.1% or 0.2% globally from the growth this financial year, and continue its ripple effect through 2012, but now experts have started believing that the impact might just not be so easily grim; it would be bluntly more.

Domestically, as according to the Bank of Japan, while the nuclear disaster rattled the markets there; it soon had international repercussions. Already having a financial system that was debt-ridden, the international community was soon found exerting a downward pressure on the Japan’s economy. The Japan’s stock index fell by 6pc soon after March 11 catastrophes. It was estimated that Japan’s capital stock dipped between 3 to 5 percent of its GDP (Moore, 2011). This, to some extent, has clipped the wings if one of third world’s economic power.

OECD - Organisation for Economic Cooperation and Development has estimated that this would limit the growth of the nation, thus weakening it a bit, to around 0.8% this year, as against1.7% expectant growth in 2010 (AFP, 2011). According to Ux Consulting Company, which is a leading consulting firm, the direct global impact of Fukushima disaster would be seen when critical countries like Japan and Germany would start decommissioning of their nuclear reactors, while the US and European nations start limiting construction of new reactors (Rafique, 2011).

Bibliography: McNeill, David. Why the Fukushima disaster is worse than Chernobyl. The Independent (Asia). 29 Aug. 2011. Web. Sept. 01. 2011. Elliott, Larry. Fukushima factor adds pressure to economic fallout from Japans crisis. Guardian, UK. 15 Mar. 2011. Web. Sept. 01. 2011. Moore, Malcolm. Japans economy stalls as tremors rattle markets. The Telegraph.12 Apr. 2011. Web. Sept. 01. 2011. AFP, Fukushima in Japan costs half of its growth in 2011. EconomicsNewsPaper.com. n.d. Web. Sept. 01. 2011.

Rafique, Mahmood. Fukushima Daiichi accident impacts $32b by 2020. TwentyFourSevenNews.com. 10 Apri. 2011. Web. 01 Sept. 2011.