Having a very strong belief in the resilience of Japan and the Japanese in the face of natural disasters, I have – paradoxically – been anticipating that the Great 2011 earthquake and tsunami will actually lead to a wave of infrastructure spending which can actually lead to a new spurt of economic growth. If political changes are also forthcoming this could be a wave of sustainable growth.
Now 3 months after the quake and tsunami the first signs are visible that the recovery is beginning. There is a long way yet to go but I remain convinced that over the next 2 or 3 years we will see Japan re-emerging as a significant motor driving the world economy.
Japan’s industrial production rose at the fastest pace in more than 50 years, led by carmakers as they restored operations at plants after a record earthquake and tsunami on March 11.
Factory output increased 5.7 percent in May from April, the biggest gain since 1953, the Trade Ministry said in Tokyo today. The median estimate of 30 economists surveyed by Bloomberg News was for a 5.5 percent gain.
Output in the transportation industry advanced 36 percent from the previous month as automakers including Toyota Motor Corp. and Nissan Motor Co. restarted production lines. Manufacturers said they plan to increase output 5.3 percent this month and 0.5 percent in July, according to a survey of companies included in today’s report.
“The report shows that the auto industry is a strong driving force” in boosting production, said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The post-quake shock is running its course and production is undergoing a V-shaped recovery.”
The output report follows data this week showing that retail sales rose 2.4 percent in May from April, in a sign that consumer demand is rebounding.
THE AUTOMOBILE INDUSTRY foresees a more stable supply situation at the very least following reports that Japanese parts production has picked up following March’s deadly earthquake and tsunami. Timing of a return to full output, however, remains uncertain given power shortages caused by the shutdown of the Fukushima nuclear plant, industry officials said.
Japan’s Ministry of Economy, Trade and Industry last week said industrial production rose by 5.7% month-on-month in May from 1.6% in April, with transport equipment among the sectors leading growth. Inventory was said to have similarly increased by 5.1% in May from previous month on improved production of electronics parts and devices, among others.