Quick economic bounce back expected

Friday’s earthquake and tsunami
have left parts of Japan’s economy “frozen”, but analysts forecast
that it will bounce back later this year.

Some of the country’s leading
producers, including the world’s biggest car maker, Toyota, have closed all of
their plants in the country.

Analysts at Nomura expect that loss
of production to dent the economy during this quarter and the next.

But they suggested growth would
return in the third quarter.

“This disaster has in effect
temporarily frozen the world’s third largest economy,” said Richard Soultanian
of NUS Consulting, which specialises in the energy supply industry.

The Japanese economy, the third
largest in the world, shrank at the end of last year and had been expected to
return to growth in the second quarter of 2011.

“We now expect the Japanese
economy to take longer than we expected to exit its current soft patch owing to
the earthquake and tsunami,” said Nomura analysts Takahide Kiuchi and
Okazaki Kohei.

The country’s global car giants are
expected to be amongst the worst affected.

Nomura suggested that annual
operating profits at Toyota, Honda and Nissan would be dented by between 3 per
cent and 8 per cent this year.

None of the car makers felt
confident to say when production would restart.

The electronics industry was also
expected to be badly hit.

Sony suspended production at eight
plants in the affected region and said it was not sure when production would
restart.

BIZstory

A man reacts while looking at a stock price board in Tokyo on March 14 as the Tokyo stock market plunged on its first business day after the earthquake and tsunami.
Photo: msnbc.com
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