Japanese industry bounces back from earthquake disruption

Tuesday, July 5, 2011 · Posted in


Japan's economy today showed signs of bouncing back from the earthquake and tsunami that left the country devastated in March.

Industrial output jumped 5.7 per cent in May, rapidly accelerating from a gain of 1.6% in April, official data showed.

It was also better than the 5.5 per cent figure expected by economists.

One of the biggest blows to the economy in March - which had a ripple effect on global trade - was the disruption to supply chains. Toyota and Honda both suspended car production in the immediate aftermath.

Today's figures suggest steady progress in restoring those crucial supply chains.

The recovery is expected to continue before a slowdown in mid-summer. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 5.3 per cent in June and increase 0.5 per cent in July.

The government upgraded its assessment on output, saying that it appears to be recovering from the impact of the earthquake.

Previously, it said that output remained at a low level due to the impact of the disaster but was expected to recover.

Figures for Japanese car industry on Monday underlined the recent impact on industry.

Toyota's May domestic production was down 54.4 per cent on a year earlier at 107,437 vehicles, while its global production was off 49.3 per cent at 287,811 vehicles. However, that was a big improvement on a 80 per cent fall in April.

Honda's Japanese production was down 53.4 per cent and global production declined 50.4 per cent. But Nissan's Japanese output rose 0.8 per cent, with worldwide production rising 19.3 per cent.

Japan, previously the world's second largest economy, was leapfrogged by China earlier this year, before the earthquake disrupted its economy.

The country has suffered two decades of lacklustre economic growth and steadily falling asset prices with the stock market and house prices both suffering. The government has a colossal debt mountain but has so far avoided a Greek-style debt crisis by borrowing cheaply from Japanese citizens.

A return to healthy economic growth would help Japan meet its obligations.

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