It's estimated that the cost of damage from the giant earthquake and tsunami in Japan could exceed $300 billion. That doesn't include the costs to the economy from lost production. On top of that, Japan faces an ongoing power shortage caused by its nuclear crisis and an already huge government debt burden.
MELISSA BLOCK, Host: From Tokyo, NPR's John Ydstie has this story on how Japan's economy will try to recover from the setback.</s>JOHN YDSTIE: This is where I met economist Naoyuki Yoshino, a professor at Keio University in Tokyo, to talk about the country's economic challenges.</s>NAOYUKI YOSHINO: Japan looks like a very wealthy country, yes. But, however, we are indebted very much. Japan government debt is almost twice as much as GDP.</s>JOHN YDSTIE: That means the debt equals two years' worth of the total output of the Japanese economy. That's led some analysts to wonder whether Japan can reasonably finance what it needs to pay for the recovery. The only way to do it, says Yoshino, is to raise taxes. After all, he says, taxes are quite low in Japan.</s>NAOYUKI YOSHINO: So there is room for Japanese people to pay for their reconstruction.</s>JOHN YDSTIE: Will the Japanese people agree to that?</s>NAOYUKI YOSHINO: We have to do it because there are so many people who have suffered.</s>JOHN YDSTIE: Professor Yoshino agrees it's a serious situation.</s>NAOYUKI YOSHINO: Energy is one of the key issues in Japan. Tokyo and other regions has a power shortage so that will damage for many, many industries including services and financial industries.</s>JOHN YDSTIE: While in the next year or so things may be difficult, Professor Tatsuo Hatta, president of the National Graduate Institute for Policy Studies in Tokyo, says the disaster may be a catalyst for reform that could help the economy in the long run.</s>TATSUO HATTA: There is a huge potential for Japan to grow again.</s>JOHN YDSTIE: A starting point, says Hatta, could be breaking up the big regional electric utilities, which would make energy and production costs cheaper. He says rebuilding the coastal fisheries destroyed by the tsunami is another chance to boost the economy to a higher level. The old fishery was dominated by small-scale, aging fisherman, and inefficient production.</s>TATSUO HATTA: And so, I think this might be the beginning of such restructuring. Not everything can change, but in the fishery and (unintelligible) things might change.</s>JOHN YDSTIE: Michael Alfant, an American entrepreneur who's lived and worked in Japan for 25 years, has no doubt the country will come out of this disaster stronger economically.</s>MICHAEL ALFANT: I am a hundred percent confident. I'm even more than confident, I guarantee it.</s>JOHN YDSTIE: Alfant owns the software company called Fusion and he's also president of the American Chamber of Commerce in Japan. He says the ability to endure and overcome these kinds of challenges is part of the Japanese character.</s>MICHAEL ALFANT: Give us three years and we will be back ahead of where we are today. And I think anyone that would opine to the contrary doesn't really know Japan.</s>JOHN YDSTIE: John Ydstie, NPR News, Tokyo.