Pos­i­tives of a post-disas­ter econ­omy

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The eco­nomic dy­nam­ics of Ja­pan, as the world’s third largest econ­omy and spe­cial­ist in en­ergy sup­ply in­dus­try, of­fer vi­able so­lu­tions in the face of the world’s 7th largest nat­u­ral disas­ter. The com­par­i­son of the Fukushima Dai­ichi nu­clear cri­sis with the Ch­er­nobyl disas­ter and of the eco­nomic losses to the loss of $100 bil­lion af­ter the 1995 Kobe earth­quake, ac­count for a soft patch in Ja­pan’s econ­omy ac­cord­ing to what global ex­perts are say­ing.

Apart from the dif­fi­cul­ties of se­cur­ing a cal­cu­la­tion of con­sumer sen­ti­ments for fac­tory pro­duc­tion from Ja­pan or fac­tors of sup­ply chain man­age­ment, the prag­matic ap­proach of the coun­try’s gov­ern­ment and cit­i­zenry needs ap­pre­ci­a­tion for cre­at­ing a uni­fied na­tional con­sen­sus on each step to­wards re­cov­ery.

The plan­ning and ef­forts have led to pos­i­tive ex­pec­ta­tions from the third quar­ter of the fis­cal year. To deal with the mas­sive re­pair bill, the ac­cord of the rul­ing and op­po­si­tion party to­wards an ex­tra ‘quake bud­get’ on the Premier’s plea to ‘save the coun­try’ stands per­ti­nent.

More­over, the con­science of the pub­lic in sup­port­ing the tax hikes for re­con­struc­tion plans can be re­garded as com­mend­able, par­tic­u­larly in the con­trast­ing view of pub­lic re­ac­tion for tax in­crease in 1997 and last year. The Lib­eral Demo­cratic Party lost con­trol fol­low­ing a re­ces­sion in 1997, while last year Naoto Kan’s party lost the elec­tion on just the men­tion of a pos­si­ble in­crease in sales levy.

Other re­cov­ery mea­sures in­clude the com­pa­nies opt­ing for liq­ui­dat­ing their for­eign hold­ings. This sell­ing of for­eign as­sets will re­sult in buy­ing more yens and a con­se­quent gen­er­a­tion of more cap­i­tal to pay for re­build­ing funds. Also, pro­vi­sion of liq­uid­ity for the bank­ing sec­tor is be­ing strongly backed by the Bank of Ja­pan.

These mea­sures can be linked to 2010 when Ja­pan’s econ­omy was al­ready in a phase of con­trac­tion but with pos­i­tive hopes for 2011 that were un­for­tu­nately crushed by the mas­sive earth­quake. Es­ti­mates just for March count for a loss of $297.8 bil­lion, with an in­stant fall in yen by 0.3 per­cent against the US dol­lar.

In the wake of nu­clear dis­rup­tion, the halt­ing of the coun­try’s gi­ant pro­duc­tion sec­tors draws a grave pic­ture. Cur­rently, the ma­jor pos­i­tive an­tic­i­pa­tions are only linked with the con­struc­tion in­dus­try which will en­ter a boom in re­build­ing projects. This pos­i­tivism does not sur­round any other sec­tor, with a ma­jor set­back be­ing ren­dered to lead­ing man­u­fac­tur­ers.

The 420,000 cars pro­duc­ing Toy­ota, along with Nis­san and Honda, were shut off for some time. Re­sump­tion of pro­duc­tion comes with the lim­i­ta­tions of scanty au­to­mo­bile parts threat­en­ing ex­ports to ma­jor global mar­kets. As a gi­ant car man­u­fac­turer, Ja­pan faces an in­crease in pub­lic debt and a cut in ex­port cap­i­tal.

A sig­nif­i­cant rea­son for the man­u­fac­tur­ing cri­sis is the elec­tric­ity short­age. The dam­aged nu­clear plants counted for about 29 per­cent of Ja­pan’s power sup­ply. There­fore, amid warn­ings of rolling black­outs the util­ity sec­tor re­mains pas­sive.

This is the same Ja­pan, de­vel­op­ing ties with the strong economies of In­dia and Rus­sia to re­cover from the 2010 re­ces­sion. With hopes in­tact, the fo­cus is now on the good that the earth­quake can bring to Ja­pan.

A greater par­tic­i­pa­tive pub­lic with an equally re­spon­sive gov­ern­ment, greater en­vi­ron­men­tal pre­cau­tions, in­creased self­de­fence mea­sures and greater sen­si­tiv­ity to­wards a vul­ner­a­ble eco­nomic and geopo­lit­i­cal sce­nario, all will con­trib­ute to an even stronger econ­omy for Ja­pan in the com­ing times

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