Japan's devastating earthquake will further slow growth in Asia, where rising oil prices and higher interest rates are already cooling an engine of the global economy, economists say.
No one is predicting a massive slowdown, but as the grim human toll of Japan's March 11 quake mounted Monday and fears of spreading radiation and prolonged power outages grew, forecasts about the economic effect of the quake also darkened.
Few economists are ready to specify just how big Asia's slump will be because of the uncertainties over Japan's Fukushima Dai-ichi nuclear plant and when power shortages _ which are hitting industrial production _ will be resolved.
"You are clearly not talking about reducing growth estimates by 50 percent for the region," said UBS economist Duncan Wooldridge. "It's likely to be measured in increments of maybe 25 basis points."
Moody's said that downside risks have intensified.
"We are now ... more negative in our assessment of the damage," Moody's said. "Disruptions to power _ begun by the earthquake and now exacerbated by the nuclear crisis _ will cause an interruption to production which is more severe than we had anticipated. Information on this aspect remains sketchy, but is almost entirely negative."
Citigroup also flagged a regional "short-term growth risk from Japan's supply disruption."
Moody's Analytics chief economist Mark Zandi said Friday that he hasn't changed his outlook for any other Asian economies, "at least not yet."
"I suspect we will make some downward revisions," he said.
Growth in East Asia was already slowing after a post-financial crisis rebound and is likely to cool further as central banks raise rates to tame inflation, the World Bank said Monday.
Its pre-quake forecast pegged regional economic growth at 8 percent in 2011 and 2012, down from 9.6 percent in 2010.
Macquarie Securities said that while the economic impact of Japan's quake across Asia is likely to be limited, regional growth will dip after a burst of trade and production in late 2010.
The quake's impact on Asian output stems not so much from a slowdown in Japan itself, but from the region's interwoven supply chains.
Japan has contributed next to nothing to Asian growth over the last five years, and if history is any lesson, growth will bounce back once reconstruction begins. Economists caution, however, that if power outages continue longer than a few months, Japan's anticipated rebound in the second half of the year may not materialize.
Disruptions in Japan are pushing up prices and causing shortages of critical raw materials and parts, especially for electronics, autos and shipbuilding. That in turn slows production in Japan's fast-growing neighbors, who are also suffering a short-term fall off in demand from a major export partner.
The anticipation of higher demand for oil and natural gas from Japan and other countries _ including guzzlers China and India, which are both reevaluating their nuclear energy programs _ has added to upward pressure on energy prices, which also hurts Asia's oil importers.
In addition to crowding out spending on other goods, higher oil prices promise to worsen food inflation and strain the budgets of countries like India, Indonesia and Thailand which pay hefty subsidies.
Thailand will be hit hardest by Japan's crippled supply chains because Thai automobile manufacturers _ which play a significant role in Southeast Asia's second biggest economy _ buy nearly two-thirds of all imported motor vehicle parts and accessories from Japan, Citigroup said in a Monday note.
"Thailand looks particularly more vulnerable than the rest given the significant role of its auto production sector," Citigroup's chief Asia economist Johanna Chua wrote.
Japan is also a crucial source of iron and steel for cars and ships, accounting for nearly 30 percent of imports across East Asia. Thailand, Korea and the Philippines are most dependent on Japanese metals, as is China though to a lesser extent, Citigroup said.
High-tech manufacturers in South Korea and Taiwan, followed by Thailand, rely most heavily on Japanese imports of plastics and chemicals like BT laminates, which are a critical component of microchips, Citigroup said. It is not yet clear when Japan's Mitsubishi Gas Chemical Co. and Hitachi Chemical Co., which have a near monopoly on production of the resin, will resume full operations.
The economic damage to South Korea and Taiwan could be partly offset as their manufacturers, which compete with Japan, gain pricing power and market share. India, Indonesia and China are most insulated because of much of their growth is domestically driven and their manufacturers are less dependent on Japanese imports, Citigroup said.