The reality is, while the events have been devastating, the economic impact should be less than feared and unlikely to derail global recovery.
In the short term the disaster will depress Japan’s economy as a result of damage to power supply, factories, transport and infrastructure. However, according to several leading economists it will have about as much impact on the global economy as the recent earthquake in New Zealand, which was minimal. It is estimated that the disaster will only dent Japanese growth by around 0.2 to 0.5% of GDP.

While the crisis is likely to slow Japanese growth for a few months, the country is likely to see a strong rebound particularly in the second half of the year as they begin the rebuilding process. This is a typical pattern seen after natural disasters, such as Hurricane Katrina in 2005 or the Kobe earthquake in Japan in 1995.

One difference this time is the threat of a nuclear catastrophe which would result in a far more disastrous outcome if it occurred. From all reports this threat is disappearing as time passes.  

In terms of the impact to financial markets, the initial reaction has been negative. This disaster occurred during a time when the world is already on shaky ground adding to the worry list for investors. This includes unrest in the Middle East and oil prices, ongoing European debt concerns and rising inflation in the Asian market. However any negative impact from the disaster in Japan is likely to be short lived. 

With  regard to Australia, we are likely to benefit from increased demand for our raw materials as Japan rebuilds.