Six Questions About The Economic Impact Of The Great Earthquake In Japan

11 days,

What economic losses did the earthquake cause?

In view of the losses caused by secondary disasters such as earthquakes and tsunamis, Jim ONeil, chairman of Goldman Sachs board of directors, said: "it is difficult to judge the extent of damage and the amount of losses."

However, the economic losses caused by this earthquake will come mainly from two aspects.

The first is direct losses from earthquakes and tsunamis.

Compared with the 1995 Kobe earthquake, the northeast part of the quake hit area is not the most important industrial area in Japan.

Nevertheless, the region also concentrates on many important industrial factories such as automobiles, nuclear power, petrochemicals, semiconductors and so on. The economic scale of the region accounts for about 8% of Japan's gross domestic product (GDP).

At present, the automobile industry suffered the most serious losses. The three Japanese manufacturers, TOYOTA, Honda and Nissan, had 22 factories closed.

Second, earthquakes will lead to supply chain crises.

Although the main manufacturers in Japan were not suffering from catastrophic damage, the supply of raw materials was affected by the interruption of the traffic due to the earthquake, and the finished products could not be pported to the airport or port.

Because Japan's position in the global industrial chain is extremely important, the supply chain crisis will bring losses to Japanese manufacturers and global manufacturers in a few months.

Will earthquakes change the trajectory of Japan's economic recovery?

Last year, Japan's economy rebounded strongly, and GDP grew by 3.9% in real terms throughout the year, the fastest growth in 20 years.

However, its economic growth was mainly driven by the first quarter, the economic downturn in the latter three quarters, and the actual GDP in the fourth quarter even shrank by 0.3%.

Economists had expected the Japanese economy to regain its momentum in the first quarter of this year.

However, many analysts pointed out that the great earthquake is likely to change this trend.

Japan's economy will suffer a lot in the short term as many factories in Japan are shut down, electricity shortages and consumer confidence are frustrated.

Wolfgang Lem, an expert on Japanese business at Commerzbank, said: "Japan's economy may still shrink slightly in the first quarter of this year."

Li Laisi, chief economist of Standard Chartered Bank, believes that there is a risk of stagflation in Japan in the short term.

But since then, with the development of reconstruction, the Japanese economy may show a "V" rebound.

After the Kobe earthquake in 1995, Japan's economy showed such a track.

David Ressler, chief economist of Nomura Securities in New York, said that funds from various fields such as government, insurance, private enterprises and individuals will be invested in the process of reconstruction, which will create jobs. The energy and construction fields that have been hit hard by the earthquake will be greatly boosted.

Some analysts predict that Japan's economic growth will rise to 3% in annualized rate in the next three quarters.