In the wake of the tsunami and earthquakes, Japan’s Retail Sales Slump Most in 13 Years
Japan’s retail sales tumbled the most in 13 years last month as the nation’s record earthquake shut stores and discouraged households from spending money.
Sales slumped 8.5 percent in March from a year earlier, the biggest decline since March 1998, according to a statement by trade ministry in Tokyo today.
Toyota Motor Corp. led a record drop in auto sales in March and domestic output plunged 63 percent after disruptions in its supply chains and factory closures. Production will return to normal by December, the automaker said.
Prime Minister Naoto Kan unveiled a 4-trillion yen ($49 billion) extra budget last week to rebuild the northeast area that was devastated by the earthquake and tsunami. The spending aims to provide more than 100,000 temporary homes and clean up debris from the disaster.
The magnitude-9 quake and ensuing tsunami crippled the Fukushima Dai-Ichi nuclear plant operated by Tokyo Electric Power Co., causing radiation leaks and power shortages in eastern Japan. The disaster left more than 26,000 people dead or missing, according to the National Police Agency.
S&P; Cuts Japan Debt Outlook to “Negative”
Japan’s debt-to-GDP is the highest in the G7 by far. It is about to get worse with government spending poised to soar in cleanup efforts. Please consider Japan Debt Outlook Cut to ‘Negative’ by S&P; on Reconstruction
Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load.
The outlook on Japan’s local-currency debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P; said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002. Moody’s Investors Service said last month the disaster may bring forward the “tipping point” for the country’s bond market.
Today’s decision adds to pressure on Prime Minister Naoto Kan, who has yet to detail how the rebuilding will be paid for and how he plans to rein in longer-term fiscal deficits. As public spending increases, revenue will likely decline because of the economic hit from the disaster, with a report today showing retail sales tumbled the most in 13 years last month.
Moody’s today reported no change to its negative outlook for Japan’s Aa2 grade rating, the third highest, after a reduction from “stable” in February because of political gridlock. Japan’s public debt will probably increase 5.8 percent to 997.7 trillion yen ($12.2 trillion) in the year started April 1, from a projected 943.1 trillion yen last year, the Finance Ministry said in January.
The Organization for Economic Cooperation and Development last week urged Kan’s government to at least double a sales tax to 10 percent and to implement increases as soon as possible. The nation’s total public debt will reach 204 percent of gross domestic product this year, according to the OECD, the highest level among nations tracked by the group.
Message from Mike in Tokyo Rogers
My friend “Mike in Tokyo Rogers” writes …
My friends and I have been running relief trips to the hardest hit areas of the tsunami. The real disaster is 30,000 dead or still missing.
We need all the help we can get and was hoping you could put up a link up to our “Black Water” video to help us get the message out.
The guys who made the video are professionals so this is BBC quality work.
Ishinomaki – Black Water
If the embedded YouTube video above does not play, please click on Ishinomaki – Black Water
Those who wish to donate to the crisis can do so via the Japanese Red Cross.
Mike “Mish” Shedlock
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