While the focus may be on those horrific industrial production and consumption numbers coming out of Japan, the reality is the one thing that matters most for the economic recovery is actually performing better than expected.The electricity shortages expected to handicap Japan, prevent its full recovery, and further damage its supply chain have been avoided, according to Societe Generale’s Takujji Okubo.
Initially, power outage was expected to continue till the end of April, and then come back in the summer. In reality, there has been no power outage since March 29. For summer, the power outage is most likely to be avoided, and estimates of power supply have been increasing.
This could go a long way toward explaining why the Nikkei has recovered so well. Okubo still believes Japan is going to experience a v-shaped recovery, boosted by expectations that an additional ¥4 trillion ($50 billion) in government spending will be in place by May.
And here’s what that v-shaped recovery is going to look like. Note, 2011 is still a mess.
Photo: Societe Generale