Japan’s economic growth will slow to 0.8 percent this year due to the impact of the 11 March devastating quake and tsunami disaster, the Organization for Economic Cooperation and Development (OECD) said Thursday, halving its earlier forecast of 1.7 percent.
But gross domestic product (GDP) of the world’s third-biggest economy is expected to sharply rebound 2.3 percent in 2012, the OECD said in a report, up from its previous estimate of 1.3 percent growth given in November.
“There is great uncertainty about developments in Japan, including the duration of electricity shortages, the problems at the Fukushima nuclear plant and the size and timetable of government reconstruction spending,” the Paris-based international organization said.
“The immediate impact of the horrendous disaster is likely to be large, extending beyond the areas devastated by the earthquake and tsunami,” said OECD, adding that damage to factories in the northeastern region has disrupted the supply chains of key industrial products even beyond Japan, notably in the automobile sector.
However, the experience of past disasters in Japan and other developed countries suggests that the negative short-term impact on economic output will be followed by a rebound as reconstruction spending picks up,” it said.
The damage to the capital stock, electricity shortages and the disruption of supply chains is projected to significantly reduce output in the second quarter of 2011, although it is likely to be relatively mild compared to the 20 percent drop following the 2008 Lehman shock.
Output and business investment are expected to rebound sharply from the July-September quarter, driven by reconstruction-related fixed investment, the 34-member international body said.