The government on Thursday said damage to infrastructure from the earthquake that rocked central Japan on New Year's Day may reach a maximum 2.6 trillion yen ($17.6 billion).
The magnitude-7.6 earthquake that struck the Noto Peninsula in central Japan has added a layer of uncertainty over the economy, amid concerns about the negative effects of aggressive monetary tightening in advanced economies and a Chinese slowdown.
"Full attention should be given to the economic impact of the 2024 Noto Peninsula earthquake," the government said, noting inflation, the conflict in the Middle East and volatility in the financial markets should also be monitored.
The quake flattened houses, and cut off power and water, affecting supply chains and local tourism. According to the Cabinet Office, damage to houses, roads, ports and other infrastructure is estimated to be somewhere between 1.1 trillion and 2.6 trillion yen in the three disaster-hit prefectures of Ishikawa, Toyama and Niigata.
The peninsula had a relatively high percentage of old wooden houses that did not meet quake-resistance standards.
While the office said the figure is calculated automatically based on the strength of the earthquake, rather than actual reports of damage, it compares with 16.9 trillion yen in the aftermath of a massive earthquake and tsunami in northeastern Japan on March 2011.
Damage after the 2016 quakes that struck Kumamoto Prefecture in southwestern Japan is estimated to have amounted to 4.6 trillion yen at most.
As for the country's economy, the office in its monthly report maintained the view that it is continuing to recover moderately though there are some signs of "pausing." It lowered the view on exports for the first time in a year, citing weakening demand in Europe.
It is the third straight month that the same assessment -- the economy has continued to recover at a moderate pace, although the pickup appears to be pausing in part -- has been used.
Japan's economy contracted in the July-September quarter, for the first time in a year, but economists expect a rebound in the three months through December.
Private consumption is "picking up" and the recent rise in capital investment "appears to be pausing," the latest report said.
Consumer prices have been "rising moderately recently," the office said, changing its wording for the second straight month.
The global economy is "picking up despite weakness in some regions," the office said, using the same expression for the ninth straight month.
