Earthquake & Tsunami in Japan 2011

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Economic is the main factor that drives a country forward because it generates income and shows stability of the country which helps every business run smoothly and draws interests of investors. However, it is hard to control the stability when natural disaster strikes because many things are hard to predict especially for big disasters like the Tsunami and earthquakes. If natural disaster occurs, it can become a nightmare for the economic as a whole. Unfortunately, Japan had encountered with this disaster in 2011 which directly hit cities including Fukushima, Miyagi, and Iwate causing a huge impact to their industrial areas. Besides that, it affected the tourism industry directly because people will not come to risk their lives leading to less tourists visiting. Moreover, it also reflects that Thailand still had low security on planning to rescue people during the worst situations like these.

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After these two natural disasters occurred, it has a huge impact to Japan economic in both short term and long term. The first temporary effect would be in the short term that will occur during the first one or two years after the disaster. They forecasted the demand in different categories of goods and services and add up the various types of spending to arrive at an estimate for GDP. For long term impact, economists usually try to focus on the ability of the economy to grow. They estimated by assuming the growth by adding the capital, hiring workers, or from productivity improvements. Even though these two impacts are separated but they are connected in a way. The immediate effect after the disaster is it destroys the productive capacity of the economy, therefore the buyer could not spend at that time and it may lead to slower of growth.

After the disaster occurs, it closed down the key ports in Japan. Some of the airports has to shut down temporarily, this effected directly to the supply chain of semiconductor equipment and materials. Furthermore, Japan has manufactures approximately 20 percent of the world's semiconductor products, such as NAND flash, some of electronic part of Apple’s Ipad as well as Japan country also supplies the wings, landing gear and other major parts of aircraft Boeing’s 787 Dreamliner. In addition, car companies such as Toyota and Nissan also consider on stopping any orderings from the products from Japan (Kimberly, 2018).

Furthermore, according to the graph above, the real GDP in Japan had dropped dramatically to -2% from 2% (Okun’s law, n.d.) as the impact of decreasing number of tourists as people does not trust the safety of their visits. Therefore, it leads to lower spending growth in the country. If money measurement (M) and velocity (V) had lower percentage of spending growth, it means LRAS will move to the left because suppliers will get affected as a whole due to less people spending money. Moreover, it also create an inflation rate to be higher as a factor of decreasing quantity of production because suppliers decrease as the factories got damaged from tsunami and earthquake create lack of production (Joy, 2014). On the other hand, people’s want still would remain at the same amount so the quantity of products is not enough. This created higher inflation rate in the long run for some products during that time because it takes time to rebuild all the damage and connect the whole industry again.

According to the graph above, it shows that Japan had faced with the worst long-term recession during 2009 and 2011. The factors of recession were banking behaviors as they start to accumulate a bad loan assets leaded to a crisis of banking, increasing of elderly population in Japan which reduce working population leaded to a recession as well as, natural disaster as they need time and more money to reconstruct, and etc (Naoyuki, 2015). Besides, this created the impact to Japan economic. It reduced the industrial output for 10% and created high unemployment rate leaded to fell of production of 9.6% during the year (Justin, 2009).

To conclude, Japan’s economic has been dropped down during 2008-2011 to create one of the worst economic recessions after the Second World War. This caused a huge impact to the whole country in order to turn positive again as they pass this entire crisis.

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