Japanese Prime Minister Naoto Kan has described Friday’s devastating earthquake and its aftermath as the country’s worst disaster since World War II. Indeed, it is quite possible that the latest quake will surpass the Great Hanshin Earthquake of January 1995 in terms of lives lost and damages incurred.

Japan is better placed than many other disaster-prone countries to respond to the crisis. It has decades of experience with quakes, and considerable wealth, unlike nations such as Haiti and Pakistan. Nonetheless, the Japanese authorities will be tested to the limits.

Although it is still early days yet, I list below the main implications of the Tohoku earthquake:

• The human toll is severe. At least 1,600 people are known to have died and a further 1,500 are missing. Local authorities believe that the final toll could exceed 10,000, which would be greater than the 6,400 killed in the Kobe (Hanshin) quake of 1995.
• The Japanese government will need to spend heavily to rebuild the damage in the Tohoku region, around the city of Sendai. Reconstruction will generate economic activity, but the costs will worsen Japan’s already dire fiscal deficit and debt burdens. Nonetheless, there is no avoiding the extra expenditure.
• The Bank of Japan is already providing emergency liquidity to the economy.
• There will be severe disruption to economic activity. Tohoku is not a major economic centre, but it still accounts for 8% of GDP and has numerous factories. Meanwhile, hundreds of thousands of people have been evacuated from the region.
• The crises affecting nuclear power stations will affect the broader economy. Japan gets a third of its power from nuclear plants, and a meltdown at one plant appears imminent. Japan has already had to shut off 11 out of its 54 nuclear plants, reducing power output by between 25% and 50%. This will raise new questions about how Japan can compensate for nuclear power in a safer way.
• The nuclear crisis will also serve as a sober warning of the dangers of nuclear plants to many countries planning to build new stations or increase their number, especially emerging economies in seismic activity zones.
• Prime Minister Kan may win a temporary political reprieve as he leads the national crisis response. Prior to the quake, Kan’s exit had seemed imminent. A swift and decisive response could win him plaudits, and indeed, he has already mobilised 100,000 troops – 40% of Japan’s military – for rescue operations. By comparison, the government’s response to the 1995 Kobe quake was deemed slow and hamstrung by bureaucracy.
• Japan’s social cohesion should help it withstand disaster of this magnitude better than many other countries. There are no reports of a breakdown of public order in the affected areas.
• The participation of China and South Korea in the rescue efforts should boost goodwill between Japan and its neighbours, especially China. Bilateral relations have been strained by territorial disputes, which re-emerged in 2010.
• As bad as the Tohoku quake was, Sendai, with little over a million people, is not Tokyo. Greater Tokyo was devastated by a quake in 1923, resulting in more than 100,000 deaths. Many geologists fear that sooner or later, the Greater Tokyo Bay Area, containing 35 million people, will be struck again. Given that this is Japan’s political, economic, and transportation hub, a mega-quake there would be much more destructive (see Peter Hadfield’s 1991 book, The Sixty Seconds That Will Change The World.)