By: Dr. Mike Campbell
Data just released have shown that Japanese exports fell by 2.2% in March, compared to how they stood twelve months before. The quake and ensuing tsunami struck on the 11th of March, so it is likely that the true position (on a full monthly basis) will not emerge until next month’s figures are released. The disaster has severely damaged the infrastructure in the affected region, including ports and airports, and has led to rolling power cuts since some power stations (apart from the nuclear facility at Fukushima) were damaged and others need to be checked. It is also likely that the power distribution network was also affected by the quake and its aftermath.
The perturbation to the power supply and the infrastructure has meant that the supply chain to areas outside the disaster zone have also been disrupted. This has meant that manufacturers have been unable to restock components and have been using up existing stocks. Many producers have used up their inventories of components and consequently, output is likely to take a further down-turn when next month’s figures are released. Unless the power supply situation can be resolved soon, the summer is likely to reflect a further down-turn in production since the summer is the peak period for electricity demand in Japan; presumably as domestic consumers switch on their air conditioning systems. This may well mean that Japanese output will struggle to return to pre-disaster levels for the rest of the year.
Car shipments fell by 28% over the level seen in March 2010 and electronics and semi-conductor exports fell by 6.9%. The decline in exports is the first down-turn seen for sixteen months as Japan had slowly emerged from the global financial crisis.