The drop in Japan’s gross domestic product in the final quarter of 2011 was likely only temporary, according to economists who largely expect the economy to grow in the first quarter this year.
Signs of improvement are already being seen in the factors that contributed to the annualized 2.3-percent decline in real GDP, including the sudden decrease in exports and delays in reconstruction projects in the disaster-stricken areas of the Tohoku region.
In addition, the gradual economic recovery in the United States, Japan's second-largest export destination next to China, is good news for Japanese companies.
But again, concerns persist about the government bond crisis in Europe, which is starting to affect the performances of newly emerging economies, such as China, and the strong yen, which is hovering around 70 yen to the dollar.
Sales of the expensive Legacy car models of Fuji Heavy Industries Ltd. in the United States are strong, but the high yen is eating away the profits.
"It is unusual to have the yen as strong as it is now,” Yasuyuki Yoshinaga, the company’s president, said. “We will have to increase the ratio of locally produced vehicles."
For Hitachi Ltd., sales of construction equipment in China have also slowed.
"The serious effects will continue to emerge in the first half of fiscal 2012," Executive Vice President Takashi Miyoshi said.
However, the basic trend of economic recovery that has been in place since summer 2011 has not changed.
Teijin Ltd. President Shigeo Ohyagi said: "I am not pessimistic about the prospects for the global economy. I believe it has entered into the economic recovery cycle."
Teijin has received orders for large volumes of film used in liquid crystal TV sets.
Many private-sector economists are forecasting growth in the first quarter, citing projects to reconstruct areas devastated by last year's Great East Japan Earthquake and tsunami.
In addition, expectations are high that personal consumption will be further stimulated through such policy measures as government subsidies for environmentally friendly vehicles.
Plant investment by companies that had been suppressed in the immediate aftermath of the March 11 natural disasters has also begun picking up.
Although views vary on when exactly the economy will resume its upward course, most experts believe there will be a gradual recovery over the entire year.
In the last quarter of 2011, the monetary amount of public works projects contracted in the Tohoku region increased by 64.3 percent over the same period the previous year.
In the disaster-hit coastal areas of Miyagi Prefecture, construction vehicles with license plates from outside the prefecture have visibly increased in number.
And construction workers from around Japan continue to gather in the Tohoku region, which has contributed to growth rates higher than the national average in spending at supermarkets and convenience stores as well as car sales.
Expectations are also high for the large road and bridge construction projects that will likely start in spring.
One problem for construction companies will be finding workers. The situation has been exacerbated by the long period of shrinkage in the construction sector due to government spending cuts.
In Miyagi Prefecture, there were about three times the number of job openings in the construction and civil engineering industries as job seekers every month between June and December.
Some projects have failed to materialize because high personnel expenses and lack of manpower have prevented companies from submitting bids.
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