ID :
184493
Thu, 05/26/2011 - 05:00
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Shortlink :
http://m.oananews.org//node/184493
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OECD Cuts Japan Economic Outlook for 2011 Due to March Disaster
Tokyo, May 25 (Jiji Press)--Japan's economy is projected to fall 0.9 pct in 2011 in real terms, against a 0.8 pct rise estimated in April, due to the impact of the March disaster, the Organization for Economic Cooperation and Development said Wednesday.
The downward revision came after the Cabinet Office said last week that Japan's gross domestic product in January-March contracted 0.9 pct from the previous quarter in price-adjusted real terms, for an annualized decline of 3.7 pct.
The Japanese GDP data showed that the March 11 earthquake and tsunami resulted in plunges in personal consumption, production and exports, putting a damper on the economy that showed signs of improvement.
"The immediate impact has been reduced output, although this is likely to be reversed in the second half of 2011 led by reconstruction efforts," the OECD said in the latest economic outlook report. In the second half of the year, the economy is expected to grow by an annualized 4.5 pct.
In 2012, the economy is expected to rise 2.2 pct, the OECD said.
But "deflationary pressures are likely to continue through 2012, with unemployment remaining above the pre-2008 crisis level," the OECD predicted.
"A detailed and credible fiscal consolidation program, including tax increases and spending cuts large enough to achieve the government's target of stabilizing the public debt ratio by 2020, is a priority," the OECD pointed out.
"The Bank of Japan should maintain an accommodative stance until underlying inflation is firmly positive," the OECD said.
The OECD said that rising food and energy prices stemming from political unrest in the Middle East and North Africa and the Japanese disaster are "damping the momentum of the recovery somewhat."
But global economic activity is "becoming more self-sustaining, with the recovery driven increasingly by stronger private final demand," the report said.
The downward revision came after the Cabinet Office said last week that Japan's gross domestic product in January-March contracted 0.9 pct from the previous quarter in price-adjusted real terms, for an annualized decline of 3.7 pct.
The Japanese GDP data showed that the March 11 earthquake and tsunami resulted in plunges in personal consumption, production and exports, putting a damper on the economy that showed signs of improvement.
"The immediate impact has been reduced output, although this is likely to be reversed in the second half of 2011 led by reconstruction efforts," the OECD said in the latest economic outlook report. In the second half of the year, the economy is expected to grow by an annualized 4.5 pct.
In 2012, the economy is expected to rise 2.2 pct, the OECD said.
But "deflationary pressures are likely to continue through 2012, with unemployment remaining above the pre-2008 crisis level," the OECD predicted.
"A detailed and credible fiscal consolidation program, including tax increases and spending cuts large enough to achieve the government's target of stabilizing the public debt ratio by 2020, is a priority," the OECD pointed out.
"The Bank of Japan should maintain an accommodative stance until underlying inflation is firmly positive," the OECD said.
The OECD said that rising food and energy prices stemming from political unrest in the Middle East and North Africa and the Japanese disaster are "damping the momentum of the recovery somewhat."
But global economic activity is "becoming more self-sustaining, with the recovery driven increasingly by stronger private final demand," the report said.
