HIT TO JAPAN’S ECONOMY

JAPAN SEES GREATER HIT TO ECONOMY AS ITS NUCLEAR CRISIS DEEPENS

Aki Ito and Keiko Ujikane

Bloomberg, April 12, 2011

Japan’s Economic and Fiscal Policy Minister Kaoru Yosano said the March 11 earthquake may result in a larger hit to the economy than previously seen, indicating a greater appetite for stimulus one month after the disaster.

“The damage to the economy may be bigger than we initially expected,” Yosano told reporters today in Tokyo. “In addition to disruptions in the supply chain, we have the added seriousness of the situation with the nuclear power plant,” he said, referring to the Fukushima Dai-Ichi crisis that officials today said has a severity rating matching Chernobyl in 1986.

Prime Minister Naoto Kan may need to turn to additional debt sales or to tax increases in coming months, given opposition at the central bank to funding deficit spending. A record of the Bank of Japan's meeting last month showed today that officials refrained from any discussion of specific additional monetary stimulus they would be prepared to endorse.

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