Japan fell into recession in the first quarter of 2011 due to the sharp drop in economic activity due to the deadly earthquake and tsunami of 11 March, drama amplified by the nuclear accident in Fukushima. The gross domestic product (GDP) in the third largest economy declined by 0.9% in Q1 2011 compared to the previous, a decrease of 3.7% annualized, the government said Thursday.
A recession is defined as two consecutive quarters of shrinking GDP. The Japanese economy had already fallen by 0.8% in real terms over the last three months of 2010 compared to previous quarter (- 3% annualized), according to official figures revised down sharply. The decline for the first quarter was worse than expected, even if the disaster occurred only at the end of the period.
The fall in activity was such that it erased the previous weeks performance. The sudden reversal was "largely due to the impact of the earthquake," said the Minister for economic policy, Kaoru Yosano. He warned that the Japanese economy to remain weak for some time because of the strength of the shock cashed by the country, but it will not last: "It is strong enough to recover from this ordeal," he said.
The impact of the earthquake, tsunami and the nuclear accident in Fukushima has hurt investment, disrupted shipments in Japan and abroad, is plunging domestic demand against a backdrop of human and material disaster, disorganization , shortage of electricity, sadness and anxiety. According to detailed data, business equipment spending and public sector investments have declined, as household consumption.
A further decline is also feared for the second quarter because of the extent of damage and disruption caused multiple circuits in logistics and industrial activity, especially as exports are also affected. The recovery is not expected before three months from July to September, when the reconstruction will be more concretely started, before stabilizing in Fukushima expected later this year.
According to the minister for economic policy, Japan should still grow by around 1% for the year, thanks to government measures to reinvigorate the country, which has lost about 25,000 people in this tragedy, the worst since the end of the war. The Government has estimated at 25,000 billion yen (297 billion dollars) the cost of the disaster of March 11, an amount which does not, however, the impact of radioactive discharges from the plant in Fukushima disaster and facing a series of serious accidents.
A first supplementary budget of about 4000 billion yen (34 billion) has already been approved for reconstruction and a second is expected to be decided in the coming weeks. 
A recession is defined as two consecutive quarters of shrinking GDP. The Japanese economy had already fallen by 0.8% in real terms over the last three months of 2010 compared to previous quarter (- 3% annualized), according to official figures revised down sharply. The decline for the first quarter was worse than expected, even if the disaster occurred only at the end of the period.
The fall in activity was such that it erased the previous weeks performance. The sudden reversal was "largely due to the impact of the earthquake," said the Minister for economic policy, Kaoru Yosano. He warned that the Japanese economy to remain weak for some time because of the strength of the shock cashed by the country, but it will not last: "It is strong enough to recover from this ordeal," he said.
The impact of the earthquake, tsunami and the nuclear accident in Fukushima has hurt investment, disrupted shipments in Japan and abroad, is plunging domestic demand against a backdrop of human and material disaster, disorganization , shortage of electricity, sadness and anxiety. According to detailed data, business equipment spending and public sector investments have declined, as household consumption.
A further decline is also feared for the second quarter because of the extent of damage and disruption caused multiple circuits in logistics and industrial activity, especially as exports are also affected. The recovery is not expected before three months from July to September, when the reconstruction will be more concretely started, before stabilizing in Fukushima expected later this year.
According to the minister for economic policy, Japan should still grow by around 1% for the year, thanks to government measures to reinvigorate the country, which has lost about 25,000 people in this tragedy, the worst since the end of the war. The Government has estimated at 25,000 billion yen (297 billion dollars) the cost of the disaster of March 11, an amount which does not, however, the impact of radioactive discharges from the plant in Fukushima disaster and facing a series of serious accidents.
A first supplementary budget of about 4000 billion yen (34 billion) has already been approved for reconstruction and a second is expected to be decided in the coming weeks.
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