The economic aftershocks from the massive earthquake off the coast of Japan, the resulting tsunami and a feared nuclear meltdown could hit global production of everything from aircraft to iPads.
Panic selling sent Tokyo shares down 10.55 per cent on worries the nuclear crisis would become a catastrophe yesterday, after radiation levels near a quake-stricken nuclear plant surged following explosions and a fire.
The Nikkei Index closed off 1,015.34 points at 8.605.15.
With ports, airports, highways and manufacturing plants across Japan shut down, the government has predicted “considerable impact on a wide range of our country’s economic activities”.
Singapore bank DBS estimated the quake and tsunami would cost Japan’s economy $100 billion, equivalent to about two per cent of its gross domestic product.
The crisis has led to a huge stock sell-off, with Japanese giants such as Sony and Toyota hit after they were forced to halt production in the country.
Sony dived 6.27 per cent, while Toyota lost 4.83 per cent and Nissan was off 3.6 per cent. Reactor-maker Toshiba, which fell by its 16 per cent daily limit Monday, was ask-only.
And the ripples are just beginning to register in the global economy.
Japan manufactures more than 40 per cent of the world’s electronic components, according to brokerage firm CLSA.
“Japan remains critical to the global tech food chain,” Bhavtosh Vajpayee, CLSA’s head of technology research, said in a report.
“Japan still dominates many parts of the tech supply chain, while contributing meaningfully elsewhere.”
Much of the NAND flash memory, for instance, for Apple’s new iPad 2 comes from Toshiba, the tech website Engadget said Monday.
“Already, we’re seeing reports predicting shortages of components that could ultimately create delays and/or increase the prices of our favorite gadgets,” Engadget wrote.
But a Toshiba spokeswoman told AFP that only one of its factories, plus its research and development centre, were still closed yesterday.
There was no suspension in production of NAND memory, she added, as the factory is in a different area far from the quake and tsunami devastation.
Factories, of course, also require raw materials and a working transport network, all of which pre-supposes the availability of fuel and electricity.
On Monday, authorities put into action plans for rolling power blackouts in areas served by Tokyo Electric Power Co (TEPCO) to make up for the loss of electricity from the country’s crippled nuclear plants.
The beleaguered power company said the measures affected an area covering some parts of Tokyo and eight prefectures.
Toyota, the world’s biggest automaker, has suspended production at all its plants – and its subsidiary vehicle manufacturers – in Japan “from March 14 through March 16”, the company said in a statement on its website.