The 17-0 loss to the Baby Blacks has put the Ireland Under-20s out of semi-final contention but they still have a shot at finishing fifth overall and the first step towards that goal comes tomorrow against Uruguay.
An Irish win over Uruguay coupled with a defeat or a draw for Argentina against pool leaders New Zealand would see Ireland finish second in Pool A, guaranteeing themselves a place in the 5th-8th place play-offs.
Should Pool A play out true to form and Pool D leaders Australia beat Wales tomorrow, that would set up an Ireland v Wales clash in Fukuoka next Wednesday with the winners going through to the 5th-6th place decider on Sunday week.
Uruguay suffered a 75-0 loss in their opening game against New Zealand but they made a significant improvement against Argentina, going down 33-15 to their South American rivals, and Clarke knows his players cannot afford to lapse after a hard-fought midweek game.
"We expect another physical battle against Uruguay. Obviously they've had two tough games already," he said.
"From our assessment of them, they're improving all the time. If we don't respect them they're a side that could certainly cause us problems."
Without suspended captain Peter O'Mahony, Ireland gave New Zealand a serious test on Tuesday and their coach took plenty of positives from the performance, albeit with missed try-scoring chances and Nevin Spence's injury on the negative side.
Commenting on the mood in the camp, Clarke said: "Our spirit is very good. We were pleased with our level of performance and work-rate against the Baby Blacks.
"However we were frustated that we didn't take the opportunities and our mistakes led to our downfall in the end."
Second row Ciaran Ruddock stood in as captain against New Zealand and he has unfortunately picked up an ankle injury in training which will see him miss the Uruguay game.
Clarke explained: "It was a pretty innocuous injury. He came down from a lineout and went over on an ankle.
"We're just monitoring that at present and we'll make a call on that in the next couple of days."