The long economic shadow of the Fukushima disaster
Over a year after the tsunami, Japan continues to suffer.
Not so long ago, in a backyard smoking area somewhere in the bowels of London's Soho, an Australian friend took a sip from his bottle of Moretti beer and told me that his brother and his young family were thinking of leaving Tokyo, where they had been based for years, for a new life Down Under. I asked my friend why. He said it was partly due to “safety concerns”.
Even today, doubts about the stability of the nuclear plants affected by last year’s earthquake and tsunami persist, while the seemingly endless churn of news stories about how far and how widely radioactive material from the disaster has spread only reinforces the impression that more bad news is on its way. I'm not convinced that the literal fallout from the meltdown (radiation, etc) is still a major threat to the health of those in Japan – but the political and economic fallout remains toxic.
On Saturday, the last running commercial reactor in Japan went offline for maintenance; all 54 of the country's nuclear facilities are now undergoing inspections. Japan is operating without nuclear power for the first time in four decades and, while the Diet debates the future of energy provision for the resource-poor island nation, oil imports soar.
Not surprisingly, the country's economic health has taken a turn for the worse. Today, it emerged that Japan's current account surplus (CAS) – a measure of what it earns from investment and trade – more than halved (a record -52.6 per cent, at 1.6trn yen) in the full year to March 2012. Since the earthquake, the CAS has contracted in every month but one; in January, it even dipped into deficit. Due to Japan's large holdings of overseas assets, the country is likely to remain for the most part in surplus but the trade picture is bleak. Exports fell around 4 per cent year on year while imports soared by 11.6 per cent.
Japan's economy is expected to pick up 2 per cent by 2013. However, business casualties of Fukushima include the electronics giant Toshiba, whose profits halved over the fiscal year, and Sony, whose annual loss of 456.7bn yen set a new record for the company. Both lay the blame on disruptions to infrastructure and other repurcussions of the earthquake, as well as on the eurozone crisis and unfavourable exchange rates that have pushed up the yen.
Though the western media have largely forgotten the disaster of 11 March 2011, the smoke has yet to settle in Japan.
NOTE: Eamonn Fingleton recently wrote on Japan's current account here; I was pointed in its direction after I'd published the piece above, but I recommend anyone interested to read it for more perspective on the subject.