How Japan is recovering one year after its massive quake

"A 30-year-old man who had a traffic accident finally recovered after 10 years. But he again suffered from an accident that could take at least 30 years to recover. His future has become endangered."

This is the diagnosis for Junko Mizuno, director of the Third Sector Studies Center at the JETRO-Asia Economic Research Institute, on the situation facing Japan a year after the massive earthquake hit the country. It took Japan 10 years to recover from the 1995 earthquake in Kobe, but more than 30 years will be needed to recover from the Tohoku earthquake since the scale of damage is three times bigger.

Mizuno said, "The Japanese economy was strong back in 1995 but is now in the midst of a recession that has lasted 20 years. This is the difference."

The office of Japan`s prime minister and the government held a news conference for foreign reporters at Tokyo Press Center Wednesday to mark the first anniversary of the earthquake. Following a briefing on if Japan can recover from the side effects of the disaster, reporters asked questions all focused on the severity of the damage due to the tsunami and nuclear meltdown in Fukushima Prefecture.

Japan is facing pressure from numerous fronts. The earthquake and ensuing tsunami left 19,000 people missing or dead, with the damage to social infrastructure and industrial facilities reaching 17 trillion yen (209 billion U.S. dollars). Tokyo estimates recovery costs to be at least 23 trillion yen (315 dollars) over the next 10 years.

The problem is that Japan must rely on government bond sales to finance these costs at a time when its national debt is double its GDP, one of the worst in the world.

Kook Joong-ho, a finance professor at Yokohama City University, said, "Government bond issuance is increasing 20 trillion yen (274 billion dollars) in net terms every year. Japan will inevitably face a worsening debt situation as it tries to create recovery funds." "Private-sector financial assets total 1,300 trillion yen (1.78 quadrillion dollars), surpassing Japan`s national debt of 1,000 trillion yen (1.37 quadrillion dollars), but the earthquake could quicken the reversal."

Energy is another urgent problem. Despite 30 percent of Japan`s electricity coming from nuclear power plants, the country`s 54 nuclear reactors are scheduled to be suspended next month. Therefore, Japan has to turn to higher-cost thermal power to meet rising demand for electricity. Against this backdrop, Tokyo Electric Power Co. will raise electricity rates for businesses by an average 17 percent next month.

Jang Soon-hong, a quantum engineering professor at the Korea Advanced Institute of Science and Technology, said, "The manufacturing industry is increasingly converging with IT, suggesting electricity rates are directly related to price competitiveness," adding, "The suspension of (Japan`s) nuclear reactors will severely hit the manufacturing sector."

Many experts, however, paint an optimistic picture that Japan`s energy problem could bolster the discovery of new growth engines. Just as oil shocks in the 1970s stimulated the development of energy-saving technology, growing anti-nuclear power sentiment could contribute to expanding the use of solar and wind energy, they say.

Still others say Japan`s earthquake and nuclear accident caused severe economic damage but strengthened social cohesion. Arita Shin, a sociology professor at the University of Tokyo, said, "Residents in damaged areas and volunteers nationwide shared pains in their recovery efforts, solidifying a sense of trust in each other," adding, "The government`s top-down policy decision system is shifting to embrace bottom-up accountability."

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