Japanese leaders pushed for an emergency budget to counter economic damage from a powerful earthquake and tsunami that killed hundreds and caused widespread destruction.
The Bank of Japan (BOJ), which has struggled to return the country to growth, said it would cut short a two-day policy review scheduled for next week to one day tomorrow and promised to do its utmost to ensure financial market stability.
“The bank will continue to do its utmost, including the provision of liquidity, to ensure the stability in financial markets and to secure the smooth settlement of funds, in the coming week,” it said.
DISASTER MANAGEMENT
The central bank has set up a disaster management team, headed by Bank of Japan Governor Masaaki Shirakawa, at its head office in Tokyo.
Auto plants, electronics factories and refineries shut, roads buckled and power to millions of homes and businesses was knocked out. Several airports, including Tokyo’s Narita, were closed and rail services halted. All ports were shut.
Japan’s biggest quake on record occurred as the world’s third-largest economy had been showing signs of reviving from an economic contraction in the final quarter of last year.
The disaster raised the prospect of major disruptions for business and a repair bill of billions of US dollars.
Leaders of the ruling and opposition parties agreed on the need for an extra budget after Japanese Prime Minister Naoto Kan asked them to “save the country,” Kyodo news agency reported.
Japan’s economy looked set to return to growth in the first quarter of this year, according to a Reuters poll this week.
After the disaster, it will probably fall again before growing more strongly as a result of rebuilding work, said Chris Low, chief economist at FTN Financial in New York.
SHUTDOWNS
Electronics giant Sony Corp, one of the country’s biggest exporters, shut six factories, just one of scores of major companies affected by the disaster.
Other manufacturing and utilities shut down include Toyota Motor Corp and Nissan Motor Co plants, officials said and media reported. The massive earthquake threatens to crimp US-bound exports of Japanese vehicles and parts in coming months, straining an already stretched supply base in the recovering industry.
If ports remain shut for an extended period, exports of Japanese automobiles to North America could be delayed, analysts said.
“It’s a very bad situation,” said Dennis Virag, president of the Automotive Consulting Group.
“Japan has excellent ports, but they’re going to be the focus of rescue efforts. I don’t know how much [non-relief shipping] is going to be going out for while,” he said.
North American-based auto plants could also be affected if parts shipments are delayed, Virag said.
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