Shock waves from the terror attacks in the US are reverberating in unexpected ways through Japan, Asia's largest economy.
After seeing the world air transportation system thrown into disruption and confusion after hijackers turned four American jetliners into missiles, Japan is rapidly realizing just how heavily its economy depends on airplanes.
For electronics exporters, hopes for a good end to a bad year are foundering on gloomy predictions of a tight-walleted American Christmas.
And in the political sphere, the sense of a world in crisis is pumping new life into Prime Minister Junichiro Koizumi's faltering program for free-market economic restructuring.
Surrounded by the sea, Japan has for decades had an acute awareness of its dependence on shipborne commerce, especially the lifeline of oil and liquefied gas tankers that bring the country nearly all its energy from abroad.
But the country woke up last week to the fact that aircraft, not ships, carried 40 percent of the country's trade last year with the US -- 11,000 parcels and 360,000 pieces of mail daily, or US$76 billion worth of goods a year.
Belying the image of Japan as a self-sufficient trading fortress, the nation now imports 30 percent of its medicines and 60 percent of its food. Much of it travels by air.
When service across the Pacific was suspended for up to five days, consumers saw immediate effects: the wholesale price of Boston tuna here doubled, for example, and California strawberries completely vanished from supermarkets.
Japanese industry, whose early adoption of just-in-time inventory methods gave it a big edge in efficiency in the 1980s, also found itself immediately smarting from the air shutdown:
With no semiconductors or car parts crossing the ocean by air, factories on both sides of the Pacific have found it necessary to halt production lines.
Japan's two leading carriers, Japan Air Lines and All Nippon Airways, each derive about one third of their income from trans-Pacific routes.
Both companies' stocks fell sharply after the attacks, as did airline stocks around the world. All Nippon said it lost US$2.5 million in the five days of disruption.
Even going on vacation tends to put Japanese people, more than most nationalities, on international flights.
For every American who visits Japan, four Japanese visit America, and the flow of traffic to Southeast Asia and other regions can be even more lopsided.
Those tourists are turning skittish and staying home, if sharp falls in airline and tour bookings are any guide, and the economic pain will be felt as much in destinations like Hawaii and San Francisco as it will in Japan.
For Japanese exporters, the big question is whether Americans will react to the threat of war and terrorist reprisals by snapping shut their pocket books.
"We still don't know if people will be having a happy Christmas or not," said Yoshiko Furukawa, spokesman for Sony Computer Entertainment, which is shipping PlayStation2 units to the US for holiday sales. Matsushita Electric Industrial, which like many electronics companies gets two-thirds of its American sales between Thanksgiving and Christmas, voiced similar concerns.
Last week, Japanese automakers suffered sporadic production slowdowns, but the real fear is the American consumer will hunker down for the fall.
"We will probably have to revise US plans, but I don't know when or how at the moment," Hiroyuki Yoshino, president of Honda, said at a press conference Tuesday.
"There are fewer people visiting our dealers in New York and the Washington DC area."
The timing of these blows to Japan's economy could hardly be worse, coming as the country had already slipped into recession.
In a dreary drum roll of statistics, Japanese industrial production in July dropped to 1994 levels.
Industrial electricity use was down 4.5 percent in August from the same month last year, and steel production was down 5.4 percent.
"If the US recovery is now delayed until the first half of next year, that means that Japan's recovery will also be delayed," predicted Toyoo Gyoten, president of the Institute for International Affairs, a private research group.
"There is now a broadly shared sense of urgency and crisis about the medium and long term future of the economy."
In July 2001, Japan's trade surplus was half the size it was in July 2000, and though its surplus with the US grew in July, it was mainly because Japan's shrinking economy bought 14 percent fewer goods from America than before.
Mamoru Yamazaki, an economist at Barclays Capital Securities, predicts that, because of the attacks, Japanese exports will fall by at least 10 percent in the fourth quarter. Private economists foresee a 1 percent contraction in Japanese economic output this year.
Harder on the public psyche has been the plunge of the Nikkei 225 stock index below 10,000 for the first time in 18 years.
The bombings "pushed the Japanese stock index into a scary place psychologically," said Paul Sheard, chief Asia economist at Lehman Brothers.
But though the crisis diverted the Bush administration's attention from Japan's problematic mountain of bad loans, Japanese politicians seem finally to be focusing on the issue.
The official estimate of the amount banks are owed by debtors who cannot pay has risen to US$150 billion, and the value of the collateral underlying many of the loans -- stocks and real estate -- has been dwindling.
Commercial land in Tokyo now sells for about one-sixth what it was worth at the peak in 1990, and are still falling -- down 6.6 percent in July from a year earlier.
For want of viable borrowers, bank lending has dropped for 44 months in a row.
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