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Editor's Blog

Global implications of the Japan disaster

As the world's third largest economy struggles to get back on its feet, the long-term effects starts to become evident.

By Editor / March 28, 2011

Tokyo Electric Power Company, Inc. vice president Takashi Fujimoto (2nd from left) and other executive officers bow at a news conference at the company head office in Tokyo. TEPCO is struggling with the Fukushima nuclear power complex and with providing electricity to customers following he March 11 tsunami, which knocked out generating capacity.

REUTERS/Toru Hanai

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As the Japanese nuclear crisis persists, its effects are being felt across the globe. Concern about radiation has prompted international shipping companies to order their vessels to steer clear of trade routes in northern Japan and avoid even the important ports of Tokyo and Yokohama, south of the Fukushima danger zone.

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Japan's Yomiuri newspaper, meanwhile, reports that lost capacity means electricity shortages will persist into summer. Because of the interconnected nature of industries such as car-making, assembly lines and parts suppliers far from Japan are being affected. Toyoto is considering idlling its North American factories while Nissan may shift engine production to the US.

While those are temporary measures, economist Takahide Kiuchi of Nomura Securities told Reuters that Japanese companies will be more likely to accelerate the move of their operations out of earthquake-prone Japan. That would further "hollow out" the Japanese economy and hurt the tax base.

If the March 11 disaster had been all there was, Japan would have enough on its hands coping with the aftermath. The nuclear crisis adds more uncertainty not just for Japan but for the world.

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