Knee-jerk reactions to catastrophes often fall wide of the mark, Stephen King, chief economist at HSBC told CNBC.
Global markets have been reacting strongly to Friday's devastating earthquake in Japan, with the Nikkei 225 falling 10.6 percent on Tuesday, its third biggest one-day fall, although it recouped some of the losses in later sessions.
European and US stocks also fell at the middle of the week, as the Japan nuclear crisis went from bad to worse. But consequences were not as bad as investors initially feared for previous disasters in history, King said.
"Think of 9/11, terrible event, people said it's going to be the trigger for a U.S. recession. The U.S. recession had been and gone before 9/11," he said in an interview.
"It’s very important to recognize that although it’s a terrible humanitarian disaster, it’s not clear what the economic consequences at this stage will prove to be."
Markets have to think about how this disaster will be paid for, King added.
"One thing you can do in Japan is raise consumption tax… to divert resources into the rebuilding process," King said, adding: "another option is to allow the exchange rate to appreciate, to choke off resources going into exports and to divert them into what’s going on in domestic rebuilding."
The yen soared to a record high of 76.25 against the dollar on Thursday.
"The rise on the yen is in part a process… to support resources coming back home rather than going abroad," King said.
The uncertainty sparked by the Japan nuclear crisis works both ways, according to King.
"First of all it might undermine global growth to a certain degree, at the same time given the increased uncertainties of the nuclear industry globally, maybe it will put upward pressure on oil prices and gas prices," he said.
The question is how many factories elsewhere in Asia rely on goods coming through from Japan, he added.
"If they can’t get through will those factories shut down… in that case you’ve got a much bigger supply shock coming through."
"One thing that worries me is the economic consequences of any kind of terrible nuclear disaster taking place … so far the part of Japan that has been affected...only accounts for 4 percent of gross domestic product, if you start seeing that spread through to Tokyo, Yokohama, you’re talking about an additional 17.5 percent – 18 percent of Japanese GDP so that when it starts to become worrying," King said.
"We shouldn't forget elsewhere in the world that we are dependent to a significant degree on the willingness of Japanese savers to invest in other parts of the world. If that changes for whatever reason, then of course we also will feel some of the hit," he added.