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March 14, 2011    

Japanese economy will recover from disasters say analysts

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by Kay Murchie

Last week’s earthquake and tsunami which hit Japan are set to cause “considerable” economic impact as the country faces a massive clean-up operation, a potential nuclear meltdown and power shortages.

However, analysts have today said the world’s third largest economy will recover later this year.

Over the weekend, the Japanese Government spoke of the 8.9 magnitude earthquake and the 13-foot tsunami which hit the northeast coast of Japan on Friday.

Prime Minister, Naoto Kan, described it as the worst crisis since the Second World War.

Shares in Japan have plunged with the Nikkei index today closing down 6.98% at 9460 points – way below the crucially important 10,000 mark.

Many of Japan’s leading producers including Toyota, the world’s largest carmaker, have closed all of their plants in the country.

As a result, annual operating profits at Toyota, Honda and Nissan are likely to suffer this year.

Meanwhile, analysts say the loss of production will hit the economy during the first and second quarters of this year.

However, growth is expected to return in the third quarter.

Nomura analysts Takahide Kiuchi and Okazaki Kohei said: “We now expect the Japanese economy to take longer than we expected to exit its current soft patch owing to the earthquake and tsunami.”

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