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Economic Impact of the Crisis on Japan

Essay by   •  July 6, 2011  •  Essay  •  457 Words (2 Pages)  •  2,231 Views

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 Economic Impact of the crisis on Japan: According to Kota Yuzawa, a Goldman Sachs Analyst the negative impact on Automobile manufacturers would be short-lived.

Many Economists believe Japan's Economy will be hurt for a while, but will show a big recovery on Rebuilding Efforts, but the economists further add that if rebuilding measures are not taken quickly the latest crisis could force the Japanese Economy into recession.

 Impact on Global Economy: According to IHS Global Insight disruptions in Japanese Industrial Activity could have a significant impact on global supply chains, which could impact industries such as autos, telecommunications and consumer electronics.

Consumer Electronics manufactures from Korea to India, US to Europe, rely on imports from Japan for chips to ships, which could raise cost of components and cause deficiencies.

Japan is also a key supplier of advanced components to Asian Nations that specialize in the final assembly phase of manufacturing. For instance, China depends on Japan for 13% of its imports, largely for capital goods such as machine tools and electronic parts, so it would disrupt production globally.

According to analysts lower Japanese productions could temporarily lower demand for energy and thus lowering the oil and commodity prices.

However, once reconstruction begins in Japan, steel demand is likely to increase.

Japan's ODA (Official Development Assistance) to developing countries in Asia like Indonesia, Sri-Lanka, Cambodia could also be impacted.

 Impact on Stock Markets: With raising concerns about economic implications of the Japanese disasters it led to sell off in major stock markets globally.

The Nikkei stock average fell by more than 14% on March 11 afternoon, which was the worst fall since the financial crisis of 2008.

With Japan already struggling with a massive fiscal deficit there is speculation that Japan might sell some holdings in US treasuries to help fund emergency payments and reconstruction on a massive scale.

 Questions Rose about the Future of Nuclear Power: The disaster in Japan has raised the questions that whether nuclear power is safe and can it be used in future. The Fukushima Nuclear plant was built to withstand major earthquakes and despite the safety measures an accident at Fukushima can be expected to slow growth of Nuclear Power.

 Impact of Rise of Japanese YEN: As the yen continues to rise in value and fears grow over Japan's damaged nuclear reactors there are chances that it might impact global economy badly. The rising yen is a consequence of insurance companies and other Japanese institutions repatriating



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