The earthquake and tsunami that struck Japan will have to have short term negative impact on Japanese growth. After the slowdown, growth will benefit the efforts of reconstruction. According to the Organization for Economic Cooperation and Development (OECD), GDP growth will be limited to 0.8% in 2011, when it expected a growth of 1.7% before the disaster.
"The immediate impact of this horrible disaster is likely to be important, extending beyond the regions devastated by the earthquake and tsunami," she says in a report. "However, experience from past disasters in Japan and other developed countries suggests that the short-term negative impact on economic output will be followed by a rebound with accelerated spending on reconstruction," says the OECD.
In the longer term, therefore, it anticipates a rebound in growth to 2.3% in 2012, revising upward its previous projection of 1.1%, thanks to investments in reconstruction. The state must invest in rebuilding infrastructure, but must also observe fiscal discipline and for that he must bear the VAT rate from 5% currently to 20%, the OECD recommended in its report.
The Japanese government estimates the cost of damage "to community facilities, housing and private fixed capital between 3.3% and 5.2% of GDP in 2010. The country's production could recover by the third quarter of this year, but private consumption is likely to remain weak until the end of the year, also warns the OECD.
Deflation remains an economic barrier because the economy will not grow fast enough to bridge the gap between supply and demand before the end of 2012, says the organization. If a new push to win money comes, the Bank of Japan should buy more government debt to lower interest rates in the long term and it must proceed with caution if they have more buying riskier assets, OECD advocates. 
"The immediate impact of this horrible disaster is likely to be important, extending beyond the regions devastated by the earthquake and tsunami," she says in a report. "However, experience from past disasters in Japan and other developed countries suggests that the short-term negative impact on economic output will be followed by a rebound with accelerated spending on reconstruction," says the OECD.
In the longer term, therefore, it anticipates a rebound in growth to 2.3% in 2012, revising upward its previous projection of 1.1%, thanks to investments in reconstruction. The state must invest in rebuilding infrastructure, but must also observe fiscal discipline and for that he must bear the VAT rate from 5% currently to 20%, the OECD recommended in its report.
The Japanese government estimates the cost of damage "to community facilities, housing and private fixed capital between 3.3% and 5.2% of GDP in 2010. The country's production could recover by the third quarter of this year, but private consumption is likely to remain weak until the end of the year, also warns the OECD.
Deflation remains an economic barrier because the economy will not grow fast enough to bridge the gap between supply and demand before the end of 2012, says the organization. If a new push to win money comes, the Bank of Japan should buy more government debt to lower interest rates in the long term and it must proceed with caution if they have more buying riskier assets, OECD advocates.
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