After the tsunami and earthquakes, Japan’s retail sales have plummeted 8.5 percent in March from a year earlier. The natural disasters has forced stores to close their doors and discouraged households from making purchases.
Toyota, a Japanese car manufacturer, suffered a record decline in auto sales in March, but a spokes person said production will return to normal by December.
Now Prime Minister Naoto Kan has revealed a 4-trillion yen ($49 billion) spending package to help rebuild the areas devastated by the earthquakes and tsunami. The package intends to provide 100,000 temporary homes and clean up debris from the natural disaster.
Often times, we hear about a terrible tragedy, feel terrible for a few days, and then forget about it. I’ve got the feeling the Japanese disasters are no exception to this rule. I have not read anything in the papers about Japan in the past two weeks, but it’s economy is going to have a miserable time climbing back up into the upper ranks internationally. Japan’s debt-to-GDP ratio was the highest in the G8 by far before the earthquake, and this government spending package will make that crucial financial indicator even worse.
Japan’s reconstruction needs will send a country already carrying the world’s biggest debt load into further bankruptcy. Leader of financial market intelligence Standard and Poor’s has lowered Japan’s local-currency debt rating. Moody’s Investors, another financial analysis firm, said last month that the disaster might bring about the “tipping point” for the country’s bond market.
The Organization for Economic Cooperation and Development (international economic organization designed to stimulate world trade) has urged Prime Minister Kan to double sales tax to 10 percent and implement the increases as soon as possible.
About a month ago, I wrote a post suggesting ways to give to Japan here
The Japanese still need our help, so give what you can.
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