TOKYO (AFP) - The recent series of typhoons and tremors to have hit Japan are likely to hurt the world's second largest economy just as it is showing signs of vulnerability, analysts say.
The Japanese government has yet to work out the cost of the damage from a weekend quake measuring 6.8 on the Richter scale and its hundreds of aftershocks, which have killed 26 people.
But the images of rows of flattened houses, cracked roads, stranded residents and the first-ever derailed bullet train in northern Niigata province sent shivers throughout the quake-prone archipelago as people braced for more tremors.
Japan's main business lobby on Monday downplayed the direct impact of the tremors on industrial output, but economists said the likely upshot would be lingering fears of disasters which would discourage consumer spending.
"The psychological impact (on the economy) might be bigger than the figures of the casualties and damage may suggest," said Yasunari Ueno, chief market economist at Mizuho Securities.
"I think it's wrong to say the macro-economic impact will be limited just by calculating the fairly small size of the economy of the shattered region."
Production could be shifted to other areas and distribution of produce could be re-routed, but the dampener of the recent string of natural disasters could be more lasting, economists said.
The quake and its aftershocks came on the heels of a record 10 tropical storms to hit Japan this year. The latest, Typhoon Tokage, was the deadliest, killing at least 80 people as it tore through southern Japan last week.
Damage to crops has sent the prices of some vegetables up threefold, lowering the purchasing power of many households.
The direct impact on Japan's gross domestic product may take time to figure out but economists said the disasters came at a bad time for the local economy.
"As far as sentiment goes, it's clear that it's not positive but it's awfully hard to quantify," said Peter Morgan, chief economist at HSBC Securities, Japan.
"I think that the typhoons are going to have a negative impact," Morgan said. "We've had fairly weak retail sales numbers recently; even the September numbers look pretty weak."
Retail sales in Japan fell 1.8 percent in August from a year earlier, the fifth decline in the past six months, the latest data showed.
An early summer boost to sales of beverages and clothing brought on by heatwaves was quickly canceled out by damage of typhoons estimated at about one trillion yen (9.4 billion dollars).
This raised concerns that, combined with a recent drop in exports and flat industrial output, Japan's economic expansion since early 2002 may peter out at a time when fears are growing that the US economy might be in worse shape than widely believed.
"The psychological impact will restrain consumer spending," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
The earthquake came at the peak of the autumn tourism season in Japan, when people go to the mountains to view changing leaves and visit hot spring resorts, including those in Niigata.
"The fear of more quakes will pull holidaymakers away from the affected region, and possibly other areas," Takumori said.
Looking ahead, the optimistic view is that an expected improvement in year-end bonuses for employees could support sales of digital products such as flat-screen televisions, the latest hit.
"But some people may sympathize with the victims of the disasters and hold off from spending on leisure," Takumori said.
The tremor that shook Niigata was the deadliest to hit Japan since January 1995, when the Great Hanshin Earthquake of 7.3 on the Richter scale killed 6,433 people in western Kobe city, casting gloom over the country for months.
"I don't think we should underestimate the psychological impact. It may drag on like the aftermath of the Hanshin Earthquake," said Mizuho's Ueno.
10/26/2004 - 05:07 GMT - AFP