The impact of the recent earthquake, tsunami, and nuclear crisis on the global economy is unclear, with some economists anticipating lingering negative effects although officials are playing down the potential drag on activity, according to Financial Times. On Thursday, Japan’s minister for economic and fiscal policy, Kaoru Yosano, insisted that his country will continue to expand despite the crisis, and the worst-case impact of the disaster was only a 0.1-0.2% marginal loss in gross domestic product. Yosano cited the small contribution of affected areas to the country’s overall output, and argued that reconstruction spending was likely to give a 1-2% boost to GDP.
Yosano said growth for the fiscal year 2011 could exceed the 1.5% forecast even after the impact of the crisis, although analysts with UBS lowered their forecast for 2011 to a 1% expansion from 1.5% previously. Their forecast for 2012 was unchanged at 2.5% growth. Writing for Bloomberg, Pacific Investment Management Co Chief Executive Officer Mohammed El-Erian highlighted three primary questions surrounding the potential ongoing impact of the disaster on the global economy. El-Erian pointed to “a global debate about the future of nuclear power,” the “funding of Japan’s reconstruction program,” and the contribution of the disaster to a global “supply shock” that increases the risk of a “global macro tipping point.”
Click here to read the story on Yosano’s remarks from Financial Times.
Click here to read the editorial by El-Erian from Bloomberg News.