Mitsui Credit Global: Disaster
causes bigger economic contraction than expected as consumers and businesses
tighten belts
Mitsui Credit Global has reported that
Japan’s economy has slipped back into recession following the devastation
caused by the huge earthquake and tsunami that struck the country in March. GDP
shrank by 0.9% in the first quarter equivalent to an annualized rate of contraction
of -3.7%.
Consensus suggests that exports and consumption were the hardest hit as the
country, posting a second consecutive quarter of economic contraction, entered
a technical recession.
In our view, the consumption aspect of the latest data gives the biggest cause
for concern. Private consumption (or consumer spending to you and me) accounts
for 60% of the Japanese economy. With consumers cutting spending in the
aftermath of the earthquake, Japan’s economy is expected to remain weak for
some time.
The next biggest component in Japan’s
economy is its export sector. Electronics, automobiles and heavy machinery are
big earners for the world’s third largest economy but the earthquake damaged
production lines and supply chains, which have had the inevitable consequences
on manufacturing and distribution.
High commodity prices aren’t helping
especially as Japan shut down its national nuclear power plant network
following the disaster at Fukushima. Here at Mitsui Credit Global, we
think things are going to get worse as the country imports far more crude oil at current high prices.
Still, the herculean effort required to
rebuild will undoubtedly prove positive for the economy and with the country’s
central bank scheduled to meet this coming Tuesday, we should expect more of
the ultra-loose monetary policy that has helped stabilize the economy since the
earthquake.
Japan will recover but it will be slow
going.
About Mitsui Credit
Global:
Providing value to their customers is their
single core value. They make strategic investments they know they can build
with their deep industry knowledge, with the goal of later selling at profit.
Using their industry leading One Mitsui Credit Global network platform,
combined with their Operational Excellence team and strong analytical and data
driven knowledge, they create and manage custom plans for each of their private
equity and real estate investments. Our strong successes enable our investors
to reach their goals, such as pension funds enabling the secure retirements of
millions of
public employees.
Contact Mitsui Credit Global:
16F / Yodoyabashi Mitsui Building
4-1-1 Imabashi, Chuo-ku, Osaka-shi,
Osaka, 541-0042
http://www.mitsuicredit.com
pr@mitsuicredit.com
81662534321
