Economics In Japan After Tsunami

Economics In Japan After Tsunami

However some analysts has estimated that the Japan economy resurrection will occur later this year. Along this and next quarter, Japan economy will negatively affected by the loss of production as Nomura analyst estimated. “However, growth will regain its footing in the third quarter,” said Nomura analyst, Takahide Kiuchi and Kohei Okazaki, Tuesday (15 / 3).
Japan economy has receded in late 2010 and it is expected to re-grow at the second quarter of 2011. However, the devastating disaster has likely halted the recovery process. “We expect that Japan economic recovery takes longer than has previously expected, due to earthquake and tsunami,” he added.
One fifth of the nuclear power plant in Japan has been closed since the disaster. Thermal factories were also closed, forcing the state facing rolling blackouts to conserve energy. “The Japan economy has received larger  consequences than what we expected,” said Tom Byrne, senior vice president at Moody’s Investors Service.

Japan economy has damaged

Economists said that the earthquake hit, the tsunami and the nuclear accident has damaged the Japan economy that has been through hard and long struggle. Richard Soultanian from NUS Consulting, which specializes in the energy supply industry, said that the disaster has been suspended the world’s third largest economy for the time being.

Electricity is critical for Japan economy

The same thing also disclosed by Michala Marcussen, head of global economics at Societe Generale. According to him, electricity power is a critical factor, “If electricity production is damaged sustainably, it will affect the Japan economy on long term.”
Sharon O’Halloran, professor of political economy at Columbia University said “The question is, whether this could push Japan economy out of deflation crisis and enable to get back on track, or will even worsen?”
Policy makers face an important task to revive the Japan economy, not only because the scale of the disaster but because of limited choices. Political leaders in Japan have pushed for an emergency budget when the government is fiscally constrained by public debt which is twice the size of the economy, the largest among developed countries.
Bank interest rates in Japan is almost reach the zero level, due to the global financial crisis and the period of economic stagnation, so that Japan has limited space to cut again the interest rates.
Contrast with New Zealand, where the country’s central bank cut interest rates by half a percent to 2.5% on last week to support today’s economy after hit by 6.3 Richter Scale earthquake on last February 22.
Currently, the Bank of Japan has pledged U.S. $ 183 billion to pump into the financial system to ensure sufficient cash. The bankers reviewed the policy today, and economists expect the most likely outcome of the meeting as an expansion of fund raising by 5 trillion yen to buy assets such as government bonds.
However, some parties said the scale of the disaster will prompt the central bank took further steps. “The BOJ is likely to take bold steps to stabilize the financial system and the possibility to return to quantitative easing or zero interest rate policy,” said Naomi Hasegawa, senior fixed-income strategist at Morgan Stanley Mitsubishi UFJ Securities in Tokyo.
However, other economists say that the disaster could spur Japan economy growth. The work of rebuilding will mean a big explosion in development expenditure.
Shares in several Japanese construction companies have increased significantly from anticipation to projects that benefit them, partly funded by the insurance company.
Analysts reflect on the Kobe earthquake in 1995 on instructions how Japan economy would react to the earthquake and tsunami. Reconstruction after the Kobe earthquake has cost U.S. $ 100 billion, of which U.S. $ 3 billion paid by insurance. In 1995, the region that much more to the affected industry sectors, reaching 12% of GDP according to estimates from Merrill Lynch Bank of America.
In contrast, the affected area recently only about 7%. However, the nuclear facilities in the area was quite influential and the estimated insurance payments for these disasters ranging from U.S. $ 14.6 to 34.6 billion.
Insurance and analysts have stressed that it was too early to accurately assess the damage caused by the Japan strongest earthquake. Rolf Tanner, a spokesman for Swiss Re says can not say what impact could happen. “It will take some time before we can determine the estimated losses in the field.”
Toshihiko Matsuno, a senior strategist at SMBC Friend Securities, said “When we look back at the Kobe earthquake, it took about a week to get an overall picture of the extent of damage before we could predict the Japan economy

from - http://www.dnewsglobal.com/japan-economy-frozen-earthquake-tsunami/3615.html