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April 27, 2011

Japan: Disasters Slash Manufacturing, Consumer Spending

The Japanese government says the country's industrial production and consumer spending fell at their sharpest pace on record in March in the aftermath of the devastating earthquake and tsunami.

In a report Thursday, the government said that production at factories and mines fell more than 15 percent last month from February, the most since the country began keeping records in 1953. New vehicle production dropped almost in half.

Meanwhile, as the nation started its recovery efforts, consumers cut their spending by 8.5 percent from a year earlier.

The Bank of Japan said the impact of the twin disasters, and the continuing effort to control radiation leaks at the Fukushima nuclear power plant, will cut the country's economic growth in the fiscal year that began April 1.

The nation's central bank said it is now predicting Japan's economy will grow by six-tenths of one percent this year, down from an earlier forecast of 1.6 percent. But as the recovery takes hold, the bank predicted the country's economy will advance at a 2.9 percent pace next year.

Japan is the world's third largest economy. But manufacturing has been markedly curtailed because of the damage that many factories sustained in the March 11 disasters in the northeastern part of the country.

Japanese car manufacturers - including Toyota, the world's biggest automaker - have been forced to cut their production lines because of a nationwide shortage of parts they normally buy from other companies. Toyota has estimated that it may lose production of 300,000 autos in Japan through the end of April and another 100,000 at its plants overseas.

The country's major electronics manufacturers have also cut their production and exports.

With the industrial cutbacks, the country's exports fell 2.2 percent in March, the first decline in 16 months.