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Could Japan's crisis prompt a global economic collapse?
The earthquake's devastation cripples the world's third-largest economy. Will Japan's disaster derail the delicate global recovery, too?
 
The normally-busy Shubuya Station crossing is quiet after last week's earthquake in Japan: The disaster's effect on the island nation's economy could derail the fragile global recovery.
The normally-busy Shubuya Station crossing is quiet after last week's earthquake in Japan: The disaster's effect on the island nation's economy could derail the fragile global recovery.
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The ongoing catastrophe in Japan has shut down much of the nation's industry, interrupting global supplies of everything from auto parts to computer chips. The triple disaster — earthquake, tsunami, and nuclear crisis — has raised fears that the disruption of Japan's economy, the world's third largest, could derail an already fragile global recovery. Could Japan's crisis tilt the world back into recession? (Watch a Bloomberg discussion about economic fears)

Yes, the disaster threatens the global recovery: The world economy is strong enough to withstand most natural disasters, says Alex Brummer at This is Money, but not necessarily one that brings its third largest economy to a "shuddering halt." Japan is home to "much of the world's technological know-how," and this tragedy has forced many huge manufacturers, like Sony and Toyota, to shut down. "It would be a dreadful mistake to underestimate the immediate and long-term impact of the terrible events in Japan on the prosperity of us all."
"Now we learn Japan's crucial role in the world economy"

No, the financial trauma will pass quickly: "Despite the jitters in the markets, the fallout from Japan's trauma for the world economy might in the end be very limited," says Michael Schuman at TIME. Japan supplies the world with steel, computer chips, auto parts, LCD TVs, and much, much more, so in the short term we may see "shortages or interruptions." Beyond that, Japan's economic troubles should not "have a very dramatic impact on the rest of the world."
"Will Japan's quake rock the world economy?"

It's too early to say... but don't worry too much: With thousands dead and Japanese authorities scrambling to avert a total nuclear meltdown, it's too soon to predict, or worry about, how the calamity in Japan will affect the rest of us, says Jay Bryan in the Montreal Gazette. But economists do note that "developed economies bounce back very quickly from even very large natural disasters," as Japan did after the 1995 Kobe quake. Short-term shortages are a given, but the country may recover nearly all of its lost output by the end of the year. And by then "the massive reconstruction" could actually be giving the world economy a bit of a boost.
"Japan's disaster could spare global economy"

 

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