The World Bank said it might take five years for Japan to rebuild after this month’s earthquake and tsunami, which killed at least 8,450 and destroyed thousands of buildings.
“If history is any guide, real gross domestic product growth will be negatively affected through mid-2011,” the Washington-based lender’s staff said in a report yesterday. “Growth should though pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.”
World Bank staff cited private estimates for the damage wrought that range from US$122 billion to US$235 billion. The damper on the economy will have a “modest short-term impact on the region,” with trade and investment flows disrupted, according to the report. The automotive and electronics industries are likely to be most affected, it added.
The World Bank said the 1995 Kobe earthquake and its aftermath might help gauge events following the magnitude 9.0 earthquake and ensuing tsunami on March 11. Liquidity injections by the Bank of Japan and appreciation in the yen, as traders abandon the so-called carry trade amid speculation overseas funds will be repatriated for reconstruction, are “combining to create downward pressure on bond yields,” according to the report.
“A temporary growth -slowdown in Japan will have a modest short-term impact on the region,” the World Bank report said. “Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems. At this stage, it is unclear how the disaster will affect Japanese outward foreign direct investment, but it may dent the pace of overseas investment as the country’s focus turns inward on reconstruction.”
The impact of Japan’s strongest earthquake on record may hurt global economic growth, Singaporean Finance Minister Tharman Shanmugaratnam said in the city-state yesterday.
Japan’s financial systems are functioning without disruption and the impact of the earthquake may not be as big as imagined, Japanese Deputy Vice Minister of Finance for International Affairs Naoko Ishii said in a conference in Singapore yesterday.
“The actual damage to the actual economic activities in the region is severe,” Ishii said. “When it comes to the overall economic impact of Japan, however, it may not be as large as we imagined. GDP share of the three most affected regions is 4 percent of the Japanese total GDP and that region is not necessarily sitting in the industrial heartland.”
Reconstruction activities will offset the effects of the earthquake, Ishii said. Business and consumer sentiment is understandably fragile, as the threat of a radiation leak from a damaged nuclear plant could affect the way of life, she said.
“Private insurers are likely to bear a relatively small portion of the cost, leaving a substantial part to be borne by households and the government,” the World Bank report said.
The cost to the insurers ranges from US$14 billion to US$33 -billion, the report said, citing an estimate by AIR World.
A power shortage after the quake forced companies, such as Sony Corp and Toyota Motor Corp to halt production.
South Korean firms are facing higher prices for memory chips, in part because Japan accounts for up to 36 percent of global production and that production is now disrupted, while Thai exporters of cars report that current supplies of components imported from Japan will last through next month, the World Bank said.
A rising yen may increase debt-servicing costs for East Asian nations, the lender said in the report, adding that about a quarter of developing East Asia’s long-term debt is denominated in the Japanese currency, ranging from about 8 percent in China to about 60 percent in Thailand.
“A one percent appreciation in the Japanese yen translates into a [US]$250 million increase in annual debt servicing on yen--denominated liabilities held by East Asia’s developing countries,” the lender said.
Developing East Asia, which excludes Japan, Taiwan, Hong Kong, South Korea, Singapore and India, will expand 8.2 percent this year, World Bank staff said in the semi-annual East Asia and Pacific Economic Update report yesterday. The region grew 9.6 percent last year, it estimated.
Policymakers across the East Asian region need to tighten monetary policy to keep inflation expectations from escalating, according to the report. Governments should also let their discretionary fiscal stimulus packages lapse, it said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day