When the world's third largest economy gets a battering, we all suffer
Of the 725 foreign-owned firms operating in Northern Ireland, just 10 are Japanese owned (Source: DETI 2010).
However, despite Japan's small share of foreign-direct investment and tourist traffic into Northern Ireland, the impact of recent developments will still have a significant impact on the local economy.
The most obvious short-term impact is on the equity markets. Those Northern Ireland individuals with a private sector pension fund will have equity investments (whether they realise it or not) in Japan. Japanese equities have tumbled by a staggering 17.5% since Thursday's close that preceded the earthquake and tsunami. However, the exposure to Japan and Asia is likely to account for a relatively small amount of an overall pension fund.
Given that Japan is the third largest economy in the world and economic activity will be seriously disrupted there even if just short-term, this will lead to after shocks in the supply chains of companies providing components for the Japanese multinational firms in the electronics and automotive sectors. This is one reason why the German stock market has been hit hardest in Europe.
Northern Ireland could well have companies supplying either directly or indirectly into this market. For example, any significant pause in production could potentially impact on local firms in the automotive sector such as Shrader and Michelin.
However, there may also be opportunities. For example, one of NI's flagship exporters - FG Wilson - was a key supplier of generators for Haiti after its earthquake last year. It could potentially see a surge in demand from Japan. From another perspective, the Japanese developments represent a downside risk to global growth and could potentially lead to the Bank of England keeping interest rates lower for longer.
The Northern Ireland economy, given its fragile state, needs interest rates to remain as low as possible for as long as possible.
While it is too easy to make a judgment on this at present, it is noted that financial markets have seen a significant fall in long-term interest rates, the so-called five-year swap rates, which are used to price fixed-rate mortgages.
A slowdown in global economic growth will also lead to a fall in commodity prices and indeed this is what has happened in recent days.