Japanese call them “zones of obliteration” or “the places of nothing” – nani mo nai tokoro.
In cities such as Otsuchi, Rikuzen-Takada, and Minami Sanriku, where trashed cars sit atop gutted four-storey buildings jutting out from dusty wastelands of pulverized debris, economic activity is almost zero. Destruction in the city of Ishinomaki, former population 160,000, resembles Kobe after the 1995 earthquake – and Ishinomaki is only one of about 50 coastal areas that remind some visitors of Hiroshima after the war.
More than two months after the 9.0 earthquake and 15-metre-high tsunami struck, government and business leaders are finally seeing first-hand the shocking scale of devastation along the 600-kilometre-long disaster area.
The human and economic losses are so overwhelming, even the government’s top advisers are estimating it will take at least a decade to rebuild northeastern Japan. “I think we will not even be finished after 10 years,” says Makoto Iokibe, a political scientist recently appointed to oversee the government’s reconstruction panel. “It will take three years just to clear debris out of the area.”
Former economics minister Heizo Takenaka estimates that Japan lost about 5 per cent of its capital stock as a result of the disasters, compared with 2 per cent from the Kobe quake.
After initially playing down the economic impact of the March 11 quake, tsunami and the nuclear disaster that soon followed, the government on Thursday announced Japan has officially fallen into recession, with gross domestic product shrinking over the past six months.
GDP, a broad measure of the value of goods and services produced, fell 0.9 per cent in the January-to-March quarter, a 3.7-per-cent annualized retreat, government data showed on Thursday. The contraction follows a decline of 0.8 per cent between October and December last year, amid a high yen and decreased exports. Many analysts expect the GDP decline will continue in the April-to-June quarter, and that power shortages and a breakdown of Japan’s supply chain could also drag the economy down until the government’s ¥4-trillion ($49-billion) initial spending package kicks in.
“The Japanese economy is expected to remain weak for the time being,” Economics Minister Kaoru Yosano told reporters on Thursday. He said the economy would likely shrink further in the April-to-June quarter, but over all, it would grow nearly 1 per cent in the current fiscal year ending March, 2012.
Many analysts, however, say Japan’s downturn is worse than expected. Private consumption, which accounts for about 60 per cent of the economy, fell 0.6 per cent, after an estimated 500,000 tsunami survivors in northeastern Japan lost their homes, automobiles and nearly everything else.
“The nuclear disaster showed just how much is wrong in Japan, actually,” Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, told the Associated Press. “And many things that seemed so stable and sure, like electricity supply … are looking not safe at all.”
Japan’s National Police Agency estimates that at least 200,000 buildings were obliterated, meaning that many small and medium-size enterprises – the backbone of Japan’s economy – were liquidated with them.
Insurance companies have been hit with more than 400,000 claims for property damage, while many survivors say they had no insurance to cover earthquakes and tsunamis.
With no jobs and no money to buy anything, the survivors will likely drag down levels of production and consumption in Japan for years. This would mean reduced earnings for Japanese corporations, whose best customers have always been close to home.
Sales of cars, trucks and buses in Japan, excluding minicars, fell 51 per cent in April from a year earlier, the Japan Automobile Dealers Association said. It was the lowest monthly total since 1974. Toyota Motor Corp.’s vehicle sales in Japan plunged 69 per cent in April.
