Posts Tagged ‘Great Tohoku quake and tsunami’

Japan back to growth with a bang with GDP up 1.5% in 3 months

November 14, 2011

I have faith in Japanese resilience and will still stick my neck out and stay with my forecast that the Japanese economy  will become a global “driver” through 2012 and 2013.

Japanese Gross Domestic Product grew by 1.5 % over the 3rd quarter (July – September) representing an annualized growth rate of 6 percent. This is the fastest rate of growth for 18 months.  The Cabinet Office said today in Tokyo that at 543 trillion yen ($7 trillion), the economic output was back to levels last seen before the March 11th  Great Tohoku quake and tsunami.

The growth seems to have been led by exports rather than the domestic impetus measures to recover from the earthquake or the subsequent spending on rebuilding infrastructure. These probably need 2 more quarters to kick-in but that  means that this growth is still vulnerable to current global weaknesses.

However the optimistic “glass half full” view would be that Japanese exports have grown mainly to Asia and the earthquake rebound  has yet to come. Moreover this has happened in spite of a very high Yen. Any recovery in Europe and N. America would be a further boost to an economy which is large enough to then act as a global motor.

NY Times: 

The rebound underscores the speed at which Japanese industry has been able to get back on its feet after the March 11 earthquake and tsunami, rebuilding factories and re-establishing supply chains severed by the destruction.

Exports jumped 6.2 percent as manufacturers got production back on track. Private consumption, which accounts for almost two-thirds of Japan’s economy, grew 1 percent, helped by a rebound in consumer sentiment and replacement demand in the tsunami zone.

Still, policy makers and economists also worry that the punishingly strong yen of recent months as well as weak growth in major trading partners, like the United States and China, will take a toll on Japanese exports. The crisis at the Fukushima Daiichi nuclear plant, meanwhile, has thrown the country’s energy policy into disarray and cast a pall over Japan’s recovery.

Related: Could the disaster in Japan power a wave of sustainable growth? 


Could the disaster in Japan power a wave of sustainable growth?

March 20, 2011

Natural disasters and wars are in general very bad things.

Nobody in their right minds would wish for one. But they occur anyway. Disasters and wars have an immediate cost in human life and capital destruction which can never be a chosen path for any ethical course of action. But when they do occur the long term consequences  can critically depend upon the economic environment in which they occur. It seems to me that when they occur in times of economic depression or economic stagnation they can provide the stimuli which can lift countries and whole regions onto a new path of economic growth. Of course the spending that follows does not in itself create wealth. The spending could have taken place on something else (or the wealth spent could have been saved). But it is the direction of spending and the mood of the spending which, I think, creates the potential benefit. It can create a step-change in thinking and behaviour and resolve and shift the path on which economic movement occurs.

The May 2008 earthquake in Sichuan, China killed over 80,000 and destroyed infrastructure on an unprecedented scale for modern China. Yet, the economy was not derailed and instead the massive rebuilding effort that followed added an extra 0.5% or so to the economic growth that followed. The January 1995 Kobe earthquake killed over 6,000 and wiped out the older central areas of Kobe and yet the investment that followed lifted the Japanese economy as a whole – but only for a time. A new mood was created but it was not accompanied by any real political shift. And from about 1999 onwards the Japanese economy has not only been stagnating but Japanese policies have also been stuck in a political rut. In spite of much talk about demographics and the ageing of Japan and the need for new thinking, the political inertia prevailed. This has only been exacerbated by the global financial crisis.

The dislocation to Japanese society and the economy caused by the Great Tohoku quake and tsunami will be massive. But I am quite sure that the Japanese and Japan will overcome. It will take some time but it could even break them out of the political rut and onto a quite different and much more sustainable path. If there is a fundamental shift out of the deadly political complacency which is long overdue, then the short term stimulus that rebuilding will surely bring could become sustainable and the Japanese economy could again be a major driver of global improvements.

chart of the day, japan industrial production 1995Natural disasters can give a boost to the countries where they occur

Rebuilding efforts serve as a short-term boost by attracting resources to a country, and the disasters themselves, by destroying old factories and old roads, airports, and bridges, allow new and more efficient public and private infrastructure to be built, forcing the transition to a sleeker, more productive economy in the long term.

“When something is destroyed you don’t necessarily rebuild the same thing that you had. You might use updated technology, you might do things more efficiently. It bumps you up,” says Mark Skidmore, an economics professor at Michigan State University. “Disasters help people think about things differently.”

Studies have found that earthquakes in California and Alaska helped stir economic activity there, and that countries with more hurricanes and storms tend to see higher rates of growth. Some of the most recent work has found a link between disasters and subsequent innovation.

Mark Skidmore of Michigan State, along with the economist Hideki Toya of Japan’s Nagoya City University, published a 2002 paper in the journal Economic Inquiry that mapped the disaster frequency of 89 countries against their economic growth over a 30-year period. Skidmore and Toya found that, in the case of climatic disasters – hurricanes and cyclones, as opposed to earthquakes and volcanic eruptions – the more the better: nations with more climatic disasters grew faster over the long run than the less disaster-prone.

Jesus Crespo Cuaresma, a professor of economics at the University of Innsbruck, has found some support for Skidmore and Toya’s argument. In post-disaster rebuilding efforts in developing countries  at least in wealthier developing countries like Brazil and South Africa, there is indeed a tendency to use the rebuilding process as an opportunity to upgrade infrastructure that might otherwise have been allowed to grow obsolete.

War is also a “disaster” which costs human lives and destroys capital but can have similar effects.

As Prof. Joshua S. Goldstein puts it:

War is not without economic benefits. At certain historical times and places, war can stimulate a national economy in the short term. During slack economic times, such as the Great Depression of the 1930s, military spending and war mobilization can increase capacity utilization, reduce unemployment (through conscription), and generally induce patriotic citizens to work harder for less compensation.

War also sometimes clears away outdated infrastructure and allows economy-wide rebuilding, generating long-term benefits (albeit at short-term costs). For example, after being set back by the two World Wars, French production grew faster after 1950 than before 1914.

Technological development often follows military necessity in wartime. Governments can coordinate research and development to produce technologies for war that also sometimes find civilian uses (such as radar in World War II). The layout of European railroad networks were strongly influenced by strategic military considerations, especially after Germany used railroads effectively to overwhelm French forces in 1870-71. In the 1990s, the GPS navigation system, created for U.S. military use, found wide commercial use. Although these war-related innovations had positive economic effects, it is unclear whether the same money spent in civilian sectors might have produced even greater innovation.

Overall, the high costs of war outweigh the positive spinoffs. Indeed, a central dilemma for states is that waging wars – or just preparing for them – undermines prosperity, yet losing wars is worse. Winning wars, however, can sometimes pay.

Fukushima Dai-ichi Sunday 20th March: Power has reached reactor#2, plant will be decommissioned

March 19, 2011

Day No. 9 since the quake and tsunami.

Media hysteria is abating as the crisis  abates and Libya take s over the headlines.  “It is becoming more probable by the day that public health consequences will be zero and radiation health effects among workers at the site will be so minor as to be hard to measure”.

On Saturday, workers were close to restoring power to cooling systems at a quake-hit Japanese nuclear power plant. Fire trucks sprayed water for nearly half a day on reactor No.3.

“The situation there is stabilizing somewhat,” Chief Cabinet Secretary Yukio Edano told a news conference.

2400 JST (1600 CET): Known status by IAEA:

It would seem that the current critical  actions with the nuclear plant are connected – for now – with the spent fuel pools.

Unit 1 experienced an explosion on 12 March that destroyed the outer shell of the building’s upper floors. No precise information has been available on the status of the spent fuel pool.

For unit 2, no precise information has been available on the status of the spent fuel pool. Authorities began adding 40 tonnes of seawater to the spent fuel pool on 20 March.

Concerned by possible loss of water in the Unit 3 spent fuel pool, authorities began spraying water into the building in an effort to replenish water levels. First, helicopters dropped seawater on 17 March, and every day since then, including today, emergency workers have sprayed water from fire trucks and other vehicles.

Emergency workers began spraying water into the Unit 4 building today.

Temperatures in the spent fuel pools of Units 5 and 6 have gradually returned to significantly lower temperatures.

2230 JST ( 1430 CET): Status – Fukushima No. 5, No. 6 reactors stable after cold shutdown.

External power was restored at 3:46 p.m. to the reactor #2. Work is now ongoing to  start trying to restore the system to monitor radiation and other data, light the control room and cool down the reactor and the reactor’s spent-fuel storage pool.

Water spraying by fire trucks continues for cooling the overheating spent fuel pools by throwing thousands of tons of water into the No. 3 and No. 4 reactor buildings. The operation is possible because apparent hydrogen explosions blasted the roofs and walls of the buildings.

As of 11:00 a.m., Tokyo Electric said the radiation level about 0.5 kilometer northwest from the No. 2 reactor dropped to 2,579 microsievert per hour, compared to 3,443 microsievert per hour at 2 p.m. Saturday.

1830 JST (1030 CET): Water spraying on reactor #4 again (2nd time today). Sounds like some danger of radioactive leakage from the spent-fuel pond is persisting.

Status summary (BBC)

  • Reactor 1: Fuel rods damaged after explosion. Power lines attached
  • Reactor 2: Damage to the core, prompted by a blast, helped trigger raising of the nuclear alert level. Power lines attached
  • Reactor 3: Contains plutonium, core damaged by explosion. Fuel ponds refilled with water in overnight operation, but pressure said to be rising again
  • Reactor 4: Hit by explosion and fire, temperature of spent fuel pond now said to have dropped after water spraying
  • Reactors 5 & 6: Temperature of spent fuel pools now lowered after rising dangerously high. Diesel generators powering cooling systems

1800 JST (1000 CET): Power has “been supplied” to reactor #2 says Kyodo news. It is not clear if the power now available has succeeded in starting up cooling pumps or just that power is now available at reactor #2. Nevertheless a huge leap forward.

The Fukushima Daiichi nuclear power plant is most likely to be decommissioned. ”Looking at the situation objectively, it is clear,” Chief Cabinet Secretary Yukio Edano said at a news conference, when asked whether the government plans to decommission the plant.

1600 JST (0800 CET): Current evacuation area not expected to change according to Japan’s Nuclear Agency.

Spent-fuel storage pools of the reactors No. 5 and No. 6 were cooled down to 37.1 °C and 41.0 °C, respectively, as of 7 a.m. Sunday.

More than 2,000 tons of water is believed to have been sprayed onto the No. 3 reactor’s pool, which has a capacity of 1,400 tons. Pressure at No. 3 reactor’s containment vessel suppression pool rose and plans to reduce pressure by venting were planned but the pressure stabilised and immediate work to reduce pressure at No. 3 reactor at Fukushima plant was deferred.

Fears of radiation release led to Ground Self-Defense Force spraying about 80 tons of water on reactor #4 for nearly one hour until 9:30 a.m., according to the Defense Ministry. Eleven fire trucks were used. Indications are that that water reached the pool.

Work to connect power and restart cooling pumps at reactor #2 is continuing.  It is planned to check the systems of the No. 2 reactor first. The building housing its containment was not damaged, which means it is hard to cool it down using water from outside.

0800 JST( 0000 CET): On Saturday and the early hours of this morning water spraying was carried out for a total of 13 hours (till about 5am on Sunday morning). The water temperature in the spent fuel pond of reactor #6 has fallen.

Power company engineers finished connecting the No.1 and No.2 reactors to external sources on Saturday evening.

Technicians seem to have attached a power cable to the No. 1 and No. 2 reactors, hoping to restore electricity later today prior to an attempt to switch the pumps on. Equipment checks are probably being conducted now.They aim to reach No. 3 and 4 soon after that.

The Register writes:

The situation at the Fukushima Daiichi nuclear powerplant in Japan, badly damaged during the extremely severe earthquake and tsunami there a week ago, continues to stabilise. It is becoming more probable by the day that public health consequences will be zero and radiation health effects among workers at the site will be so minor as to be hard to measure. Nuclear experts are beginning to condemn the international hysteria which has followed the incident in increasingly blunt terms.

0100 JST (1700 CET 19th): IAEA  press conference on the situation at the Fukushima Daiichi nuclear power plant. It hopes that power will be restored to reactor 2 today, which will then act as a hub to restore power to reactor 1. However it is not clear if water pumps have been damaged and if they will even work once power has been restored.

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