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J apan's nuclear crisis and the devastations caused by last Friday's earthquake and tsunami are unlikely to

trigger a global recession as happened in the aftermath of the collapse of the US investment bank Lehman
Brothers three years ago, according to leading economists.

However, they expressed fears that automobile and electronic industries around the world, especially in
Asia, Europe and the US, may face manufacturing delays, if the Japanese production of components
remains crippled for a long period.

Concerns over a renewed global recession or a bankruptcy of Japan are unfounded, said Thomas Mayer,
chief economist, Deutsche Bank, Germany's largest bank.

Even though Japan is the world's third largest economy, its share of the global gross domestic product
(GDP) is below 5 per cent.

Therefore, the consequences for the global economy from the catastrophe will be very minimal, Mayer said
in an interview to German economic daily Handelsblatt.

In the areas hit by the earthquake and tsunami, relatively less industries are located, but the main problem is
the disruption of power supply.

The Deutsche Bank estimates that the power cuts could reduce monthly growth of the Japanese GDP by 0.1
per cent, Mayer said.

The Japanese economy has to cope with a second successive quarter of negative growth this year after a
strong turnaround in 2010.

Before the earthquake and tsunami, the Deutsche Bank had forecast a 1.6 per cent growth for the
Japanese economy this year.

This will have to be corrected downwards depending on whether the nuclear crisis intensifies and how long it
takes to start the reconstruction, he said.

Mayer estimated the costs of reconstruction will be much higher than around 10 billion yen invested by the
government after the Kobe earthquake if the situation at the crippled reactor complex in Fukushima worsens
and becomes a full-blown nuclear catastrophe.

In the Kobe earthquake, much more industries were destroyed, but the number of casualties were around
6,500, which is about half of the estimated loss of lives in the present disaster, he said.

Klaus Juergen Gern of the Institute for World Economy at the University of Kiel said that the earthquake,
tsunami and the unfolding nuclear crisis in Japan could affect supply of electronic components worldwide,
especially chips which are crucial for a wide range of industries, including the automobile sector.
Impact might be contained: BofA-Merrill Lynch

The recent 8.9 magnitude earthquake in Japan -- and the tsunami that followed -- are a major humanitarian
and economic tragedy.

BofA Merrill Lynch Global Research has issued an analysis of the effect of today's Japanese earthquake on
global markets. The event's immediate market impact is likely to be contained.

Though longer-term risks do remain, they will take some more days and weeks to unfold.

So far, the most pronounced economic effect of this terrible event has been to add, in the very short term,
to what we call a "risk-off" -- in other words, a temporary move by some investors out of what they perceive
to be riskier assets.

Additionally, for a time markets may lose a certain amount of liquidity as Japanese investors, as well as
government and corporate interests, redirect more resources toward needs tied to the quake.

But disasters, natural or otherwise, normally have only a temporary economic impact unless they provoke
some large or permanent policy response -- the classic example being the Fed's dramatic rate cuts in
response to 9/11.

Lessons from the past

Perhaps the most appropriate analogy to the current situation is the Kobe earthquake, which struck Japan
on January 17, 1995. In that disaster, 7,000 people died and $100 billion was spent on reconstruction.

The economic consequences were both direct and indirect. The Nikkei fell 8% in five sessions, slumped
20% from its previous peak to its April 1995 trough and took 10 months to recover its losses.

The yen actually rallied 20% versus the US dollar, in response to a big repatriation of Japanese capital to
pay for the recovery efforts. Asian markets fell 6% very quickly but immediately recovered, while the S&P
500 was largely unaffected.

What to watch for

The earliest financial reports out of Japan on Friday, after the earthquake, had Japanese GDP being
downgraded 0.1-0.2%. That will likely take 2011 Japan GDP growth down to 1.3% for the year. If that holds,
it does not sound sufficient to provoke a far-reaching Japan policy reaction.

If the earthquake does end up having a meaningful impact on global investments, it likely will be because
bonds and equities could be hurt by a major withdrawal of capital by Japan.