Economic Policy and condition after the great east …Economic Policy and condition after the great...
Transcript of Economic Policy and condition after the great east …Economic Policy and condition after the great...
Economic Policy and condition after
the great east Japan earthquake
Mr. Itsushi Tachi
Senior Fellow, Economic & Social Research Institute
Cabinet Office, Government of Japan
Sources: National Policy Unit
White Paper 2012
Ⅰ. Influence of the Earthquake
2
Date: March 11th, 2011
Devastated Area:
・From Hokkaido to Kanto region,
・Mainly Northeast Pacific region
Number of Missing and Dead:
・ Around 19,000 persons
Damaged Stocks:
・Around 16~25 trillion yen*
・Around 16.9 trillion yen**
*estimated by Cabinet Office, Economic Research Division
**estimated by Cabinet Office, Disaster Management
Division
Features:
・Great Damage by Tsunami
・Supply Chain Disruption
・Electricity Constraint
・Damage to Nuclear Power Plant Cabinet Office
The Scale of The Great East Japan Earthquake
Ⅰ. Influence of the Earthquake 1
Close-up to next page
Cabinet Office
The Damage of 3 Tohoku Prefectures
Ⅰ. Influence of the Earthquake 2
Iwate Miyagi Fukushima
Km
person(s)
Kuji City
Miyako City
Kamaishi City
Rikuzen-takata City
Sendai City
Ishinomaki City
Kesenmuma City
Soma City
Minami Soma City
Iwaki City
Fukushima Nuclear Power Plant
Km
Km
Number of Missing and Dead in 3 Tohoku prefectures
Minami Sanriku Town
Natori City
Onagawa Town
Namie Town
Ofunato City
Yamada Town
Tanohata Village
Iwaizumi Town
Otsuchi Town
Noda Village
Fudai Village
Higashi Matsushijma City
Yamamoto Town
Watari Town
Iwanuma City Hirono Town
Naraha Town
Tomioka Town
Futaba Town
Okuma Town
Shinchi Town
Takajo City
Shiogama City
Rifu Town
Matsushijma Town
Hirono Town
Damaged Stocks in Disaster Areas *estimated by the Cabinet Office of Japan(June 24,2011)
Buildings, etc. (housing, offices, plants, machinery, etc.)
Lifeline utilities (water service, gas, electricity, and communication
and broadcasting facilities
Social infrastructure (river, road, harbors, drainage, and airport, etc)
Others (including agriculture, forestry and fisheries)
Total
approx. 10.4 trillion yen
approx. 1.3 trillion yen
approx. 2.2 trillion yen
approx. 3.0 trillion yen
approx. 16.9 trillion yen
Ⅰ. Influence of the Earthquake
Estimated Economic Damage of the Great East Japan Earthquake
3
Tremendous support from the international community
Assistance offered from • 163 countries and regions • 43 international organizations
(As of October 21st 2011)
Rescue teams were dispatched from 29 countries, regions and international organizations
(As of October 21st 2011)
Source: Ministry of Economy, Trade and Industry
US Navy/US Pacific Command (Operation Tomodachi)
Ministry of Defence
Foreign assistance and rescue efforts
4 Ⅰ. Influence of the Earthquake
Republic of Korea (12th - 23rd March) Team of 107 rescue members, 2 rescue dogs
Singapore (13th - 15th March) Team of 5 rescue members, 5 rescue dogs
Germany (14th - 15th March) Team of 41 rescue members, 3 rescue dogs
Switzerland (14th - 16th March) Team of 27 rescue members, 9 rescue dogs
U.S. (15th - 19th March)Team of 144 rescue members (including 12 rescue dogs)
China (14th - 20th March) Team of 15 rescue members
U.K. (15th - 17th March)Team of 77 rescue members (including 8 reporters), 2 rescue dogs
Mexico (15th - 17th March) Team of 12 rescue members, 6 rescue dogs
Australia (16th - 19th March) Team of 72 rescue members, 2 rescue dogs
New Zealand (16th - 18th March) Team of 52 rescue workers
France (16th - 23rd March)Team of 134 rescue members (including 11 Monacans)
Taiwan (16th - 18th March) Team of 28 rescue members
Russia (16th - 18th March) 75 rescue members in Team 1, 80 rescue members in Team 2
Mongolia (17th - 19th March) Team of 12 rescue members
Turkey (20th March - 8th April) Team of 32 rescue members
Indonesia (19th - 23rd March)Team of 11 rescue members, 4 members (official and medical staff)
South Africa (19th - 25th March) Team of 45 rescue members
Israel (29th March - 10th April) Team of 53 medical staff
India (29th March - 6th April) Team of 46 relief members
Jordan (25th April - 12th May) Team of 4 medical staff
Thailand (8th May – 3rd June) Two teams of 2 medical staff
Sri Lanka (12th May – 1st June) Team of 15 recovery assistance staff (Staff of the Ministry of Disaster Management and Human Rights)
Philippines (28th June - 11th July) Team of 3 medical staff
Aomori
Prefecture
Hachinohe
Iwate Prefecture
Iwate Prefecture
Miyagi
Prefecture
Miyagi Prefecture
Fukushima
Prefecture
Fukushima
Prefecture
Kamaishi
Ofunato
Kesennuma
Minami-Sanrikucho
Ishinomaki
Onagawacho
Shiogama
Shichigahamamachi
Tagajo
Sendai
Soma
Iwanuma
Taiwan
Natori
Taiwan
Source: Ministry of Foreign Affairs
Outline of Operations of Rescue Teams from Foreign Countries and Regions
Taiwan
Ⅰ. Influence of the Earthquake
Map of sites where rescue teams from foreign countries and regions operated
5
Industrial Production& Exports
6
Soon after the earthquake, industrial production and exports declined sharply.
Nowadays, industrial production is picking up as the reconstruction of supply
chains has progressed. Exports exhibit signs of picking up.
Ⅰ. Influence of the Earthquake
Source : Ministry of Finance Source : Ministry of Economy, Trade and Industry
Consumer Activities 7
Source : Cabinet Office “Monthly Economic Report”
Due to a mood of self-restraint, a concern for lack of electricity and harmful
rumors, the Great East Japan Earthquake and Fukushima nuclear plants
accident have dampened consumer activities temporarily.
Consumer activities are showing a V-shape recovery.
Ⅰ. Influence of the Earthquake
Source : Cabinet Office ”Economic Watchers Survey”.
Supply Chain Reconstruction: Production
8
Source : Ministry of Economy, Trade and Industry
“ The Second Emergency Survey on the Actual Status of Industries after the Great East Japan Earthquake”
Production is steadily recovering toward pre-disaster levels in production
bases directly and indirectly affected by the disaster.
Ⅰ. Influence of the Earthquake
Supply Chain Reconstruction: Alternative Suppliers
9
Source : Ministry of Economy, Trade and Industry
“ The Second Emergency Survey on the Actual Status of Industries after the Great East Japan Earthquake”
Almost all manufacturers can secure availability of alternative suppliers.
Supply chain reconstruction has been progressing rapidly.
Ⅰ. Influence of the Earthquake
*Reason of multiple answer: some companies use plural kinds of materials, component and parts.
65%76%
0%
20%
40%
60%
80%
100%
Almost secured alternative
suppliers
As of Apr 2011
Material Industry(26)Processing Industry(21)
95% 100%
Procurement from
alternative supplier alreadystarted
As of June 2011
Material Industry(22)Processing Industry(17)
Survey for Availability of Alternative suppliers: Secured Alternative Suppliers
(Multiple answers)
12%
48%
0%
20%
40%
60%
80%
100%
No alternative supplier for
some raw materials &components
As of Apr 2011
Material Industry(26)Processing Industry(21)
0% 18%
No alternative supplier for
some raw materials &components
As of June 2011
Material Industry(22)Processing Industry(17)
Survey for Availability of Alternative suppliers: No Alternative Suppliers
(Multiple answers)
10
0
10
20
30
40
50
60
70
80
90
100
3 12 3 (Prediction)
2011 12
(%)
(month)
(year)
Sales (All Industry)
Impact to the production and sales
by the shredding of Supply chain
Increased significantly
Increased
No Change
Decreased
Decreased significantly
Impact of shredding of supply chain was resolved early in 2012.
Ⅰ. Influence of the Earthquake
(Source) ANNUAL REPORT ON JAPANESE ECONOMY AND PUBLIC FINANCE 2012
11
19.9 17.3 24.1 29.0
57.6 61.7 51.3 43.3
0102030405060708090
100
Total 20 to 100 million yen 100 millon to 1
billion yen
1 billion yen or over
(%)
No change of suppliers of products
and parts because of present
partnership and costs.
There is plans to promote the
diversity of supplier of products
and parts.
Management Policies about Supplier of products and parts
0.9 1.1 0.6 0.0
12.2 12.2 12.1 12.3
84.6 85.6 83.8 79.7
2.1 0.9 3.1 7.6
0.2 0.1 0.3 0.4
0102030405060708090
100
Total 20 to 100 million yen 100 millon to 1
billion yen
1 billion yen or over
(%)
Management policies about regions of the suppliers by scale
Management policies about numbers of the suppliers in domestic
Increased significantly
Decreased
No Change
Increased
Decreased significantly
Ⅰ. Influence of the Earthquake
(Source) ANNUAL REPORT ON JAPANESE ECONOMY AND PUBLIC FINANCE 2012
7.6 3.8
12.9 20.5
1.3 1.4
0.9
1.3
4.8 5.3
3.8
3.3 13.6
10.6
20.2
20.1
62.0 70.0
46.4
41.4
0
10
20
30
40
50
60
70
80
90
100
Total 20 to 100 million yen 100 millon to 1 billion
yen
1 billion yen or over
(%) There is no need to raise the
percentage of supply chain from
overseas.
There is no plan to change the
percentage of supply chain from
overseas.
No change of suppliers of
products and parts because of
present partnership and costs.
There is plans to begin supply chain
from overseas.
There is plans to increase the share
of supply chain from overseas.
Management Policies about Supply chain from overseas
after the east Japan earthquake
Large companies plan to increase the share of supply chain from overseas.
12
(Source) ANNUAL REPORT ON JAPANESE ECONOMY AND PUBLIC FINANCE 2012
Ⅰ. Influence of the Earthquake
Manufacturing companies plan to increase the share of supply chain
from overseas.
1.5
17.5
5.6 0.9
2.5
0.9 5.8
4.3
4.6 2.6
23.8
14.5
82.1
39.3
62.8
0
10
20
30
40
50
60
70
80
90
100
Construction Manufacturing Services
(%) By type of industry
Management Policies about Supply chain from overseas
after the east Japan earthquake
Ⅰ. Influence of the Earthquake
There is no need to raise the
percentage of supply chain from
overseas.
There is no plan to change the
percentage of supply chain from
overseas.
No change of suppliers of
products and parts because of
present partnership and costs.
There is plans to begin supply chain
from overseas.
There is plans to increase the share
of supply chain from overseas.
13
(Source) ANNUAL REPORT ON JAPANESE ECONOMY AND PUBLIC FINANCE 2012
BASIC CONCEPT • Main administrative actors are municipalities.
• The central government will present guidelines for reconstruction and provide support on finance, human resources, know-how and other aspects .
• Reinforce bonds (kizuna) with the international community; “reconstruction open to the world”
TIMEFRAME • 10 years for the reconstruction period (the first 5 years for
the “concentrated reconstruction period”)
RESPONSE ACTIONS TO BE IMPLEMENTED • Measures for the recovery and reconstruction of the
disaster-afflicted areas and for the restoration of lives of affected people
• Measures to be taken in areas closely connected with disaster-afflicted areas;
• Measures for nationwide disaster prevention and reduction.
BUDGET SCALE (estimation, national and local governments)
• ¥ 23 trillion in the next 10 years (¥ 19 trillion in the first 5 years)
SUPPORT FOR RECONSTRUCTION • Create “system of Special Zone for Reconstruction”
• Establish “easy-to-use” grant for implementation of reconstruction plans formulated by local governments
• Work towards reconstruction with the vitality of private sector
POLICIES AND MEASURES Building Disaster Resilient Regions
• Build regions which respond to challenges of aging society and population decline and mobilize measures on the concept of “disaster reduction”
• Realize swift reorganization of land use
Revival of Local Economic Activities
• Mobilize public and private funds for affected business enterprises, reduce corporate effective tax rate
• Assure quick recovery of logistic infrastructure, promote the use of renewable energy and improve energy efficiency
• Promote foreign investment to Japan and acceptance of foreign nationals with skill and knowledge.
Nation-building incorporating lessons from the Earthquake
• Promote international cooperation to share lessons learnt as global knowledge asset
• Verify measures to be taken in case of future earthquakes and strengthen response capacity to disasters
• Conduct in-depth study on the Great Earthquake including international joint study to contribute to disaster prevention
Reconstruction from Nuclear Accident
• Implement emergency, recovery and reconstruction measures and solve the nuclear accident as soon as possible.
• Monitor and provide information on radiation dose and develop system to assist inspection to assure food safety.
“Basic Guidelines for Reconstruction in response to the Great East Japan Earthquake” was decided by the Reconstruction
Headquarters in response to the Great East Japan Earthquake on July 29,2011. The Guidelines constitute a blueprint for the
Government and other actors to tackle numerous challenges in the reconstruction process.
Basic Guidelines for Reconstruction in response to the Great East Japan Earthquake
'decided on July 29,2011(
Source: Secretariat of the Headquarters for Reconstruction in response to the Great East Japan Earthquake
Ⅰ. Influence of the Earthquake 14
First Supplementary Budget: Total of 4.15 trillion yen (approved on 2 May 2011)
• Disaster relief and other measures 482.9 billion yen
• Removal of debris caused by the disaster 351.9 billion yen
• Public infrastructure projects 1.2 trillion yen
• Loans in response to the disaster 640.7 billion yen
• Grants to local governments and other expenditures 120 billion yen
Second Supplementary Budget: Total of 1.99 trillion yen (approved on 25 July 2011)
• Compensation for damage caused by the nuclear accident 275.4 billion yen
• Support for people affected by the disaster 377.4 billion yen
• Reserve fund for recovery and reconstruction 800 billion yen
• Grants to local governments 545.5 billion yen
Third Supplementary Budget: Total of 12 .1 trillion yen (11.73 trillion yen allocated for reconstruction ) (approved on 21 November 2011)
Main
ly for em
ergent relief
and
recovery
Mainly for reconstruction
Source: Secretariat of the Headquarters for Reconstruction in response to the Great East Japan Earthquake
Policies and measures on track FY2011 Third Supplementary Budget (1)
Ⅰ. Influence of the Earthquake 15
Policies and measures on track FY2011 Third Supplementary Budget (2)
Disaster relief 94.1 billion yen Removal of debris caused by the disaster 386 billion yen Additional public infrastructure projects 1.4 trillion yen Loans in response to the disaster 671.6 billion yen Grants to local governments 1.6 trillion yen Grants in response to the disaster 1.5 trillion yen Reconstruction from nuclear accident 355.8 billion yen Nation-wide disaster prevention 575.2 billion yen Other expenditures related to the disaster 2.4 trillion yen
Subsidy to locate enterprises/industries in Japan Employment measures Restoration and reconstruction of fishery, agriculture and forestry Project of creating “eco-towns” Measures to support small and medium sized enterprises Reconstruction open to the world (youth exchange, international cooperation, etc.) Development of disaster resilient information network
See the detail: www.mof.go.jp/english/budget/budget/fy2011/11sb03.pdf
Outline of the FY2011 Third Supplementary Budget 11.73 trillion yen allocated for reconstruction
Source: Secretariat of the Headquarters for Reconstruction in response to the Great East Japan Earthquake
Ⅰ. Influence of the Earthquake 16
Ⅱ. Japanese Economy
'%,YoY) (%, QoQ, S.A.)
CY2010 CY2011 11Q1 11Q2 11Q3 11Q4 12Q1
GDP 4.4 -0.7 -2.0 -0.3 1.9 0.0 1.2
Domestic Demand (2.7) (0.1) (-1.8) (0.7) (1.1) (0.7) '1.0(
Private Demand (2.3) (-0.1) (-1.7) (0.2) (1.1) (0.7) '0.7(
Private Consumption 2.6 0.1 -1.5 0.6 1.1 0.7 1.2
Private Housing -4.2 5.4 1.6 -3.1 4.8 0.1 -1.5
Non-residential Investment 0.5 1.1 0.2 -0.4 -0.2 5.2 -2.1
Private Inventory (0.8) (-0.5) (-0.9) (0.0) (0.3) (-0.4) (0.3)
Public Demand (0.4) (0.2) (-0.1) (0.5) (0.0) (0.1) '0.3(
Government Consumption 2.1 2.0 0.4 0.7 0.3 0.4 0.7
Public Investment 0.4 -3.6 -4.6 7.3 -0.6 -0.5 3.8
Net Exports of Goods and Services (1.7) (-0.8) (-0.2) (-1.0) (0.8) (-0.7) '0.1(
Exports of Goods and Services 24.2 -0.1 -0.4 -6.3 8.7 -3.7 3.0
Imports of Goods and Services 11.1 5.9 1.2 0.2 3.5 0.9 1.9
Figures in brackets show contributions to changes in real GDP.
(Source) Quarterly Estimates of GDP:January-March 2012 (The Second Preliminary), Cabinet Office
Ⅱ. Japanese Economy 17
Quarterly Estimates of GDP
In FY2012, the Japanese economy will grow, driven by domestic demand as intensive implementation of full-fledged reconstruction
measures is expected to create steady demand and employment.
As for the world economy, major economies are expected to pick up on the assumption that concerted policy efforts by governments in
Europe and others will stabilize the international financial and capital markets under the European sovereign debt crisis. This will create
an environment favorable to Japan’s exports and production.
With regard to prices, the rate of increase in consumer prices is forecast to be approximately 0.1%, owing to such factors as the
narrowing GDP gap.
Downside risks include a further downturn in the overseas economy amid the deepening European sovereign debt crisis, the appreciation
of the yen and the subsequent acceleration of hollowing out of industry, constraints on the electricity supply, and crude oil price increase.
○ Main Economic Indicators for FY2012 ○GDP growth rates and contributions to the real GDP growth rate
- 3.7
- 2.1
3.1
- 4.6
- 3.2
1.1
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
FY2010 FY2011 FY20112
Forecast
Contribution of public Contribution of external
Note: All figures above except for contributions and unemployment rate are
year-on-year growth rate as percentage.
Note: The figures for consumer price index is headline CPI.
Note: The figures for unemployment rate in FY2010 and FY 2011 are estimated by
Cabinet Office.
3.2
- 0.0
2.2
1.1
- 1.9
2.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
FY2010 FY2011 FY2012
Forecast
Contribution of
private demand
Contribution of public
Contribution of external demand
FY2010 FY2011 FY2012
Actual
(%)
Actual
(%)
Forecast
(Approx%)
3.2 -0.0 2.2Private consumption
expenditure1.5 1.1 1.1
Private residential
investment2.4 3.6 6.3
Private non-residential
investment3.5 0.2 5.1
2.3 0.4 1.6
0.1 0.6 0.2
0.8 -1.0 0.4
1.1 -1.9 2.0
Consumer price index -0.4 -0.1 0.1
5.0 4.5 4.3 Unemployment rate
Real GDP
Contribution of
private demand
Contribution of
public demand
Contribution of
external demand
Nominal GDP
Summary of Economic Outlook for FY2012 (January 24, 2012)
Ⅱ. Japanese Economy 18
(Source) Japan Center for Economic Research "ESP Forecast" (Average of the economic forecasts collected from 40 economists between April 26 and May 8, 2012)
Main Economic Indicators from 2011 through 2013
FY2011 FY2012 FY2013
Actual
(%)
Forecast
(%)
Forecast
(%)
Real GDP -0.0 2.2 1.5
Normal GDP -1.9 1.5 1.3
CPI(excluding fresh food)
(2010=100) -0.1 0.1 0.2
Unemployment Rate 4.5 4.3 4.1
Average Forecasts by Private Research Institutes
Ⅱ. Japanese Economy 19
70
75
80
85
90
95
100
105
Ja
n
Feb
Ma
r
Apr
Ma
y
Ju
n
Ju
l
Aug
Sep
Oct
No
v
De
c
Ja
n
Feb
Ma
r
Apr
Ma
y
Ju
n
Ju
l
Aug
Sep
Oct
No
v
De
c
Ja
n
Feb
Ma
r
Apr
Ma
y
Ju
n
Ju
l
Aug
Sep
Oct
No
v
De
c
Ja
n
Fe
b
Ma
r
Apr
2009 2010 2011 2012
Index of Industrial Production ( CY2005=100, S.A.)
Feb. 98.5
Mar. 82.5
Apr. 95.8
Production
Ⅱ. Japanese Economy 20
(CY2005=100, SA)
Exports Quantum Index Imports Quantum Index
40
50
60
70
80
90
100
110
120
130
140
2009 2010 2011 2012
Asia
Total
US
EU
70
80
90
100
110
120
130
140
150
2009 2010 2011 2012
LNG
Total
Note: The dotted lines show 3MA figures.
(CY2005=100,S.A.)
Exports and Imports
Ⅱ. Japanese Economy 22
(Source) The package for electric power supply and demand, decided on 18th May 2012, The Energy
and Environment Council and Electricity Supply-Demand Review Meeting.
(Note) The table above shows the supply-demand gap in the case that the temperature in this summer is
the same as the temperature in 2010, without nuclear power plants.
Hokkaido Tohoku Tokyo Chubu Kansai
Supply -
Demand -1.9% 2.9% 4.5% 5.2% -14.9%
Target of
Electric
Saving -7% - - -5% -15%
Hokuriku Chugoku Shikoku Kyushu Total
Supply -
Demand 3.6% 4.5% 0.3% -2.2% 0.1%
Target of
Electric
Saving -5% -5% -7% -10% ―
The Outlook of the Supply-Demand Gap in This Summer
and Target of Electric Saving
Ⅱ. Japanese Economy 23
Budgets Expenditures
(trillion yen)
Estimated
impacts '% of GDP in FY
2010)
May 2, 2011
supp. Budget 4.0 0.7
Jul. 25, 2011
supp. Budget 2.0 0.3
Nov. 21, 2011
supp. Budget 12.1 1.7
Apr. 6, 2012
budget FY2012 2.5 0.3
Contracts of Public Works (YoY) Budgets and Estimated Impacts
-20
-15
-10
-5
0
5
10
15
20
1 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4
2010 2011 2012
'%(
Reconstruction-Related Demand
Ⅱ. Japanese Economy 24
(%, yoy) Consumer Price Indice (CY2010=100) and Output gap
-10
-8
-6
-4
-2
0
2
4
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ
00 01 02 03 04 05 06 07 08 09 10 11 12
Output gap
Headline CPI
CPI excluding food and energy
Prices
Ⅱ. Japanese Economy 25
Current Account Balance (as % of GDP) Trade Balance (as % of GDP)
-3
-2
-1
0
1
2
3
-20
-15
-10
-5
0
5
10
15
20
2003 2004 2005 2006 2007 2008 2009 2010 2011
Exports
Imports
Trade Balance (Right scale)
-2
-1
0
1
2
3
4
5
6
2003 2004 2005 2006 2007 2008 2009 2010 2011
Trade Balance Income
The others Current Account
Balance of Payments
Ⅱ. Japanese Economy 26
0
5
10
15
20
25
30
1990 95 2000 05 10 15
Projection of Overseas Production Ratio in
Manufacturing in 5 years later
Actual
0
5
10
15
20
25
30
1990 95 2000 05 10
Processing
Manufacturing
Basic Material
Overseas Production Ratio (Actual) Comparison between Projection (5 years later)
and Actual
(Source) Annual Survey of Corporate Behavior, Cabinet Office
% %
Trends of the Overseas Production (Actual and Projection)
Ⅱ. Japanese Economy 27