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the effect of Japan quake on global economy

By Lisa Franklin,2014-07-01 10:16
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the effect of Japan quake on global economy

Q:Will Japans quake rock the worlds economy?

1.The Japanese economy is the worlds third-largest,and

    its companies play important roles in everything from

    industry to high-tech to finance .there in no doubt that the disaster in Japan will somehow affect the global economy.

    However,There is little reason to believe the troubles in Japans economy will have a very dramatic impact on the rest of the world.Its apparent that industrial output and demand in japan will take a hit,and so will the growth.But that wont translate into big losses for the global economy.

    As far as Im concerned,there are two reasons why.

    First,though Japan is a big economy,it exports more than it imports,thus a decrease in demand doesnt spill

    over much into the global economy.

    Second,Japan has been in a 20-year economic funk,and consequencely,the importance of the country in the world economy has been on the decline.As we know,Last year ,China surpassed Japan and has become the worlds second-largest economy.Since the economy doesnt grow much,it doesnt contribute much to the world

    growth.

    In a word,the consequences of Japans crisis on the

    rest of the world is inevitable,but not strong enough to rock the global economy.

2.Q:How does Japans quake affect the world economy

    The main impact of Japans crisis will show itself in

    supply chains. Japan is tightly integrated into global manufacturing networks and is an important supplier of tons of stuff the world needs,from the steel to semiconductors.So any disruption of supply of components and materials in Japan will ripple through those supply chains,potentially causing shortages or interruptions that would hamper factory operations around the world .The situation is probably most serious in electronics,since Japan produces 40% of the worlds

    electronics components.This supply chain problem may be short-term,as companies find new sources of

    components,and there is enough space capacity in Japan and elsewhere to replace production lost to quake damage.but based on whats going on in Japans industrial

    sector these days,problems seem inevitable.Factories are shut across the country,and with power shortages and

transport a mess,industrial production is unlikely to get

back to normal for weeks.

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