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The Sendai earthquake in Japan will have long lasting economic effects in Japan and the world

Japan with the 3rd largest economy in the world and involvement of much of the worlds technology (think Sony, Sharp, Kyocera, Toshiba, Toyota, Nissan) will have aftershocks throughout currency markets and costs of goods following the horrific combination of earthquake, tsunami, nuclear incidents and now rolling electrical brownouts including Tokyo that we are just watching now.

The Nikkei index dropped 5% Monday morning.  The Bank of Japan is standing by to inject enormous amounts into the economy in Quantitative Easing that exceeds the breadth that even the US has used.

These contrasting stories reflect the depth of the problem while at the same time, seeking to simply mount a search and rescue operation for the residents of Northern Japan.

Towns vanish, thousands die – but a nation begins its fightback | The Independent

But despite everything, Japan’s spirit remains intact. As one blogger wrote yesterday: "Our grandparents rebuilt Japan after the war and the growth was considered a miracle around the world. We will work to rebuild Japan in the same way again. Don’t give up Japan! Don’t give up Tohoku [the north-east region]!"

Japan weighs economic implications of tsunami |

Yet the earthquake at the very least throws a huge question mark over an economic recovery that economists had hoped would gather steam in the current quarter after stalling in the last three months of 2010.

The Japanese economy grew 3.9 per cent last year, its fastest performance in two decades. But output is still well below levels set before the global financial crisis and gross domestic product actually contracted 0.3 per cent in the last quarter compared with the previous three months.

Written by Colin Henderson

March 13, 2011 at 20:52

Posted in Uncategorized

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