How Long Could Japan's Post-Crisis Construction Boom Last?

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		SAI THE WIRE CLUSTERSTOCK MONEY GAME GREEN SHEET WAR ROOM LAW REVIEW LATEST VIDEO Thursday, March 17, 2011 How Long Could Japan's Post-Crisis Construction Boom Last? At the start of Japanese disaster, economists came out with a simple explanation as to what the impact of the earthquake would be on Japan's economy: The economy will be hit in the short-term, but GDP will grow more in future months than expected because of reconstruction. We haven't seen a better image of how that process works than this one from Barclays. It shows that, when the earthquake hits, production falls in the economy due to the destruction of infrastructure. Then, as cleanup and reconstruction commences, demand increases, and the economy ends up growing more as a result. Barclay's GDP projections fit this model, with Q2 GDP revised down to +0.8%, Q3 up to +3.2%, and Q4 up to +3.0%. Uncertainty remains over Fukushima, but Japan's recovery also depends on how much the Japanese government is willing to spend. From Barclays: In our view, fiscal policy is the key to moving from a phase of production decline to a phase of overall increase in demand. At this stage, however, it remains unclear when the FY 10 second preliminary budget will be compiled and how big it will be. Although private-sector reconstruction activity could pick up ahead of activity in the public sector, the rebuilding of public infrastructure such as harbors and roads will still depend on fiscal policy. Read » Also On Clusterstock Today: Raj Rajaratnam GAVE Insider Information Too Here's Why We're Not Surprised By The 'Blankfein Might Resign' Story The 12 Japanese Companies Slammed The Hardest By The Disaster "Exasperated" Sheila Bair Tells Rowdy Bankers: "I Can't Believe This, I Really Can't Believe This" Advertisement CHART OF THE DAY: The Dow Makes Huge Swings On Every Fukushima Headline CHART OF THE DAY: Remember All Those Comparisons To Kobe? CHART OF THE DAY: The Country With The Most Riding On A Japanese Recovery Share this email: Buzz Facebook Twitter Digg Reddit StumbleUpon The email address for your subscription is: dwyld.kwu.careers@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Clusterstock RSS Feed Business Insider. 119 Fifth Avenue, New York, NY 10003 Terms of Service | Privacy Policy

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