We will use March 2011 Tohoku as a case study on the impact of natural disasters on Japan GDP. Initial Impact of natural disaster Personal Consumption – The immediate aftermath of the earthquake and tsunami is only natural for consumption to decrease due to stores being closed or destroyed in the disaster area and reduced income from the disruption in work. Exports – Japan’s economy is largely export-based, and the immediate aftermath of March 2011 earthquake, manufacturing plants have been forced to shut down, Japan’s GDP loss is estimated at 0. 7 percent to 3. 0 percent.
Often, however, the quantitative impact of this first round is small, particularly when the disaster happens to Japan whom is the third largest economy in the world. Tourism – The devastating earthquake and tsunami, a growing death toll and search for missing persons, and an evolving nuclear radiation threat are causing many travelers to cancel trips to Japan. International arrivals went down by 50% in March and 62% in April. Inbound leisure tourism fall by an estimated 90% in the two months, according to Japan Tourism Agency, with domestic travel down almost by 20% over the period.
The disruption to demand was felt throughout the country and not just in the north eastern region that was directly affected by the earthquake and tsunami. This decrease the consumption of domestically produced goods and services and bring down the GDP. Short-term Impact of Natural Disaster government spending – Japan government has pledged to rebuild the destroyed housing and national infrastructure by announcing the disaster relief package of approximate $50 billion. This increase in government spending will likely boost the economy.
The Research paper on The Impact of Earthquake Hazards
Discuss the view that the impact of earthquake hazards depends primarily on human factors (40 marks). It is impossible for anybody to argue that human factors do not have an effect on the impact caused by earthquake hazards; however the extent of the effect is debatable depending on the situation. This can depend on many different aspects, for instance the level of development in the relevant ...
Insurance funding the cost of rebuilding amount to approximate $33 billion. Another $10 million will come from Foreign Aid and donations. The rest of $210 billion of the cost of repairs will have to come from the savings of the Japanese households or companies. Repairing buildings, cleaning up, rebuilding all require paid services, building supplies, labor, etc. These transactions will show up in GDP measures in the months/quarters after disaster as a slight increase in total GDP.
In short term, a natural disaster there comes first a short decrease in growth in the aftermath of the disaster followed by a surge in activity that translates in more GDP growth prior to the disaster. GDP measures economic production by counting the dollar value of all transactions where something new is produced and sold. Some economist will comment that it is a deceptive measure in total GDP after a disaster because the Japan is not really significantly better off. They are just getting back to the condition before the disaster.
GDP counts the fixing, but not the damage done. The mistaken idea that disaster are good for the economy is what economists call the Fallacy of the Broken Window. Long-term Impact of Natural Disaster The growth of GDP might look fine after a natural disaster, but if it is only due to the local government borrowing a lot of money in order to rebuild what was damaged immediately, in the long run, they might postpone the real cost, the repayment of the loan, to future generations. This large sum of orrowed money might hamper the country when dealing with future economic fluctuations, or might cause the country to not be able to invest in otherwise good infrastructure projects. What we know about the long-term effects of natural disasters is scant and inconclusive. The most recent attempts to evaluate the long-running impact of disasters on per capita income suggest that there is no evidence of any such adverse effect. Conclusion If adequate financing and national resources exists, then we rarely find a national income impact on GDP or the economy lasting beyond perhaps a 6 months to a year.
The Business plan on Goods And Services Gdp Economy Business
It is to my belief that no one can possibly predict the future of the economy. Because of this we are faced with many questions that cannot be easily answered. Will the economy recover drastically or simply continue to increase moderately? Or could the economy in turn go into a recession? "There's been plenty of good news about the U. S. economy... employment is expanding (2. 4 million new payroll ...
The smaller the economy, the greater the potential for longer lasting damage and even a failure to rebuild at all. Haiti, for example, which was an extremely poor and badly managed economy prior to the hurricane, and whose weak economic base was severely damaged. Despite a substantial international aid response, Haiti has not recovered. Haiti’s economy has shrunk more than eight per cent since the 2010 earthquake, and much of the country remains in rubble.
Japan although a country of strong economy with all resources and finances to rebuild following a disaster, there are still a lot of external shocks factors, example flooding in Thailand. Exports in Japan slowed down as a results of shortages of parts from Thailand causing a drop in Japan’s GDP growth in the last quarter of 2011. Consumer spending remain weak with wage growth stagnant, and the investment outlook is still also downbeat, including for residential investment. This leaves, Japan heavily dependent on external demand to pull the economy along.
