Japan Threatens a Long Recession:


Japan Threatens a Long Recession

Japan Recession

The economic consequences of earthquakes and tsunamis seem to manage. Unless the financial markets are losing patience with the highly indebted countries.

The disaster was the “heavy blow”, which might exist in the Japanese economy in general, told the New York economics professor. The earthquake and the tsunami would be “significant consequences” for the country’s export industries. The pervasive pessimism of many of them only “Mr. Doom” shares its name once again all the glory.

But not all economists agree with him. Many are optimistic, some are in the reconstruction of the next country, including a chance. They believe it could be followed by a short-term economic recession, a recovery phase. In the end, Japan could stay for a long recession safe.

What makes you so sure of the economists, the lower economic output that is affected by the earthquake and tsunami. In the prefectures, which are directly affected by the disaster, only about six percent of gross domestic product of the estimates of Commerzbank. Taking only the regions of Miyagi and Iwate, most destroyed, there are about 2.5 percent. “The disaster regions are economically more of a lightweight”, Klaus-J├╝rgen Gern of the Institute of World Economics in Kiel.

This speaks to the view of many economists for a slight downturn in the economy – but not for a long recession. Although in the short term, demand falls, because the business is in crisis. It also has factories as the car manufacturer Toyota and Honda have been closed temporarily supply fails, the supply of goods falls in the country. After a few months, but there was again the effects are similar to those resulting from a strike: What has been building will be dismantled. A rapid collapse of the economy would be, but not a disaster, at least not economically.

Economists quoted in their January 1995 estimates. At that time shook the earth at some time in Japan, the region was struck Kobe. 6,400 people died, 140,000 houses collapsed. The disaster which cost about $ 120 million, about two percent of total economic output in Japan – the event is today counted as the most expensive of its kind to all economic experts to the earthquake was in the basement. On the other hand, remained very stable. Although industrial production was removed a month, but rose a few weeks later steep.

In this regard, economists and government of Japan also hope. It also has to do with the strangeness of the world’s wealth is still measured. the capital of a country and now in Japan, is destroyed, dips in the normal growth statistics do not. However, if the companies contracted to build bridges, roads and houses again, increasing the gross domestic product.

In other words, the country’s reconstruction could lead to Japan at the end of an economic recovery. Japanese Prime Minister Naoto Kan, now speaks of an economic upswing, just as the United States with the “New Deal” experienced by former President Roosevelt. Unicredit bank estimated that Japan’s economy in the first half still significantly impaired. But then it will likely return to “substantial impulses.

That is, the mind, the positive scenario. The crucial question is: Is Japan to avoid a nuclear catastrophe? If it was nuclear emergencies in Fukushima, which would make any projection on the head. An atomic cloud, which prefers to Tokyo would be a disaster, an economic About 18 percent of the country’s economic performance is generated in the capital.

But there is another risk. Analysts believe it was during the earthquake and tsunamis closed about 20 percent of all nuclear facilities – a six per cent of total energy supply in the country. Already, energy is rationed in Tokyo, and utilities warned of failures, which may hamper production throughout the country.

A last unknown factor will be the reaction of financial markets. Japan’s reconstruction will cost money, including the state. The country will have to hang a great incentive program to eliminate the damage – and therefore budgetary effort. Already, the country is estimated by the International Monetary Fund, with nearly 230 percent of GDP in debt, much more than the U.S. and all European countries. Further increase the debt, the lack of investor confidence is growing that Japan may return the money plus interest.

In the world, distrust some time. Back in January reduced the credit rating Moody’s credit rating of Japanese government debt by one level.

Although Japan could try the government to cover part of the new debt in selling the securities that has developed around the world. The yen, however, the currency was revalued. This is bad for exports, of which the Japanese economy depends heavily.

Prophets of a Japanese government broke discuss, so far, the country’s domestic debt financing, especially through its large domestic savings – and therefore almost independent of foreign investors. In the course of demographic trends that will change, however, increasingly: The recent buyer of government bonds to retirees who do consume more. The interest rates used to be very low for Japanese government bonds, the government gets into trouble, as in Greece, Portugal and Ireland.

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