Oliver's Insights - The likely economic and financial impact of Japan's earthquake
15 March 2011 - This note looks at the likely impact on economic activity, investment markets and Australia from Japan's earthquake and subsequent tsunami.
The key points are as follows:
- The Japanese earthquake has caused terrible human suffering and our thoughts are with the Japanese people and all those affected.
- In the short term, the earthquake will likely depress Japan’s economy as a result of damage to factories, power supply, transport infrastructure and confidence. However, by the second half of the year the rebuilding effort is likely to result in a boost to growth.
- While it has added to short-term uncertainty in global investment markets, we don’t expect the earthquake to derail the global economic recovery or growth in Australia. In fact, increased commodity demand associated with rebuilding will ultimately provide a boost for Australia. We continue to see the recent pullback in share markets as a correction, and not the start of a new bear market.
