OECD+report+says+Japan's+GDP+growth+will+slow+to+0.8%+in+2011+-+Caroline

Title of Article: OECD says Japan’s GDP growth will slow to 0.8% in 2011. Source: [] Date: April 22, 2011 Explanation: Japan has accounts for 56 percents of Japanese exports, and GDP was stable until the March 11 disaster made a lot of economic problems to the country. This year, OECD predicts that the GDP growth will decrease to 0.8% because of the earthquake and tsunami issue. Due to the many deaths of people, torn down houses, and shortages in electricity, the economy will go down because the people, who are also known as consumers, will not have the money to afford much necessity, so not many stores will be able to conduct their businesses. There is a great uncertainty about developments in Japan because of the continuous coming of earthquakes and tsunamis, so the time and strength of the economy to recover will be hard to forecast. Also, exchange rates and commodity prices are put at risk because of the unexpected disaster. The damage of capital stock, electricity shortages will disrupt the supply of producers, thus decreasing the supply curve. The supply curve will go down because of the lack of factors of production. However, this shortage and damage will not last long. OECD predicts that Japan will recover in 2012 by 2.3% because of their experiences of past disasters and their 56% of exports worldwide. Therefore, Japan will only be at risk in short term, but will recover in long term due to the amount of currency they have to reconstruct their country.

Figure 1 shows the normal demand and supply of markets in Japan before the disaster.



Figure 2 shows the decrease of supply because of the electricity shortages and damage of capital stock. The decrease results with the price going down, and quantity going down as well.

Figure 3 also shows the markets in Japan after the disaster. The dot on the demand curve will go down because quantity demanded is changed. So, price will be lowered even more, however quantity will rise.

Definitions:


 * GDP **: the total values of goods produced and services provided in a country during one year
 * Factors of Production: **four resources that allow an economy to produce its output. (land, labor, capital, entrepreneurship)
 * Economic growth: **increase in economic activity
 * Economic development: **measure of welfare
 * Demand: **quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period.
 * Supply: **willingness and ability of producers to produce a quantity of a good or service at a given price in a given time period.
 * Expenditure method: **a measuring method of GDP. Measures the value of all spending on goods and services in the economy.
 * Nominal GDP: **value of GDP at current prices
 * Real GDP: **Nominal GDP adjusted for inflation
 * HDI: **includes data on three basic goals of development (health, education, and standard of living.

Conclusion: I do agree with the OECD's prediction of Japan's GDP. Japan has a lot of exports from other countries, and experiences from past earthquakes and tsunami disasters so they're recovery from the March 11 disaster will not take as much time than other countries who are inexperienced. Japan will suffer in short term economically because of the lack of factors of production. The number of people's deaths and injuries effect the factors of production because there will be a decrease in the number of people who will labour for production. Also, the lack of safe land that can produce for businesses will effect the factors of production as well.