The Economic Consequence Of The Japanese Disaster: Negative 8.6% GDP Growth


Photo: AP

The immediate economic impact of the Japanese disaster is going to be negative growth of 8.6% annualized in Q1 2011, according to Societe Generale.That’s a horrendous number, but it masks what is going to be a strong comeback only a quarter later, when growth will be 7.8% annualized.

And it’s going to get even better thereafter, according to Societe Generale:

The rebound is likely to be followed by even stronger growth in Q3 and Q4. While private consumption may decline again, if power shortages persist over the summer, we expect various reconstruction demands to fully kick in by Q3. We also expect manufacturers to have finished their production adjustment by the second half of 2011 to deal with power shortages in the greater Tokyo area (Kanto area).

This explains the large amount of speculative inflows the Japanese economy has experienced in the wake of the quake. Investors believed the market was undervalued in the days after the event, bought in, and are now looking forward to the country’s growth boom in coming quarters.

For the year though, Japan will perform weaker than expected, only growing 1%, according to Societe Generale analysts.

Don’t miss: Our complete guide to the economic impact of the Japanese disaster >

Japan GDP

Photo: Societe Generale

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