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very interesting!
Japan Has Not Asked For Fund Financial Assistance
| quote: | WASHINGTON (Dow Jones)--Japan has not requested any financial assistance from the International Monetary Fund and Tokyo has the resources it needs to handle the current crisis, a fund spokeswoman said Thursday.
Caroline Atkinson said the Japanese government was correctly focusing on the highest priorities: "Restoring the economy as quickly as possible to its full growth potential is the most important contribution that policy can make now and that on the fiscal side, the focus should be on providing the humanitarian assistance, rebuilding critical infrastructure, and of course, addressing the nuclear situation."
"The Japanese economy is a strong and wealthy society and the government has the full financial resources to address those needs," Atkinson said.
A devastating 9.0-magnitude earthquake and ensuing tsunami ruined cities and villages in northern Japan last Friday. Japanese authorities raised the death toll Thursday to 5,457, with another 9,508 missing, though the numbers are expected to climb.
An early estimate by National Australia Bank put the total damage cost as high as $200 billion. On Thursday, the Bank of Japan announced the provision of emergency funds for a fourth straight day, continuing its effort to calm concerns about the disaster's impact on the economy.
The comments come as the Group of Seven largest economies plan to hold a teleconference later Thursday on the Japanese crisis to discuss both potential ways to help Tokyo and the impact on the global economy. Given that the strong yen may weigh further on the beleaguered economy, markets are anticipating the Bank of Japan may intervene to weaken the currency, and are awaiting to see whether the G-7 will support such a move publicly or even possibly coordinate intervention. At this point however, a raft of economists said it's unlikely for the U.S and Europe to actively coordinate in the foreign exchange markets.
Ms. Atkinson declined to comment on the strength of the yen--which hit historically strong levels against the dollar this week--or on whether the authorities should intervene in their exchange rate to soften the economic impact following the disaster. The fund is watching the longer-term trend, she said.
She pointed out that after the 1995 Kobe earthquake there was a similar strengthening, and said the yen's movement is possibly due to expectations of repatriation of capital to Japan.
She said that while second-quarter growth in Japan would obviously be hit hard--particularly industrial output--and Japan's economic problems are likely to affect the region, it's difficult to determine the longer-term impacts. She added there's uncertainty about how long it may take to resolve the nuclear problem, restore power and basic infrastructure.
"It's a very complicated situation to analyze especially given that we don't quite know yet what the impact in the short-term will be and what the reconstruction needs will be over the longer term," Atkinson said.
The economic impacts of the catastrophe will be factored into the IMF's World Economic Outlook due out in April, balancing the short-term damage with longer-term grow from reconstruction.
Prior to the disaster, the IMF had already expressed concerns about Japan's mounting fiscal deficits and public debt problems. While the crisis certainly will boost public spending in the near-term, it could also end up boosting growth as infrastructure is rebuilt. The key question is how quickly can the country get its production back up: if it takes too long, a temporary shift of manufacturing elsewhere in the region to meet the gap left by the Japanese could become a more fundamental migration of production.
Although the Kobe earthquake didn't involve a nuclear crisis, Ms. Atkinson said that historically growth can rebound quickly and strongly given the reconstruction efforts.
But she added, "There is a lot of uncertainty, actually, I'm not sure that anybody knows quite when the power situation will be resolved."
-By Ian Talley, Dow Jones Newswires, 202-862-9285;
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