HONG KONG — The Japanese central bank announced measures Thursday to help reconstruction efforts in areas affected by the devastating earthquake and tsunami last month but held off deploying any more sweeping measures in its economy-stimulating arsenal.
The Japanese economy, already burdened by deflation and anemic growth, was dealt a heavy blow by the disasters that struck the northeast on March 11. The direct damage caused by the quake and tsunami, combined with subsequent power shortages and disruption to supply chains, caused production to plunge.
In an immediate reaction to the turmoil last month, the Bank of Japan pumped liquidity into the financial markets, beefed up an asset purchase program and intervened in the foreign exchange markets in a bid to stop a sharp spike by the yen.
The steps helped calm the markets. The Nikkei 225-stock index has recouped more than half of the losses it suffered in the week after March 11, while the yen’s postquake ascent has been reversed. That means the central bank, at least for now, can provide more limited, focused support for the economy, analysts said.
The bank announced Thursday that it would offer a loan program totaling ¥1 trillion, or about $11.7 billion, to financial institutions in the disaster area, in an effort to help them meet future demand for funding needed for reconstruction.
“Japan’s economy is under strong downward pressure, mainly on production, due to the earthquake,” the bank said in a statement. “There is high uncertainty about the possible effects of the earthquake disaster on Japan’s economy.”
As had been widely expected, the bank kept its key interest rate unchanged in a range between zero and 0.1 percent.
Analysts say they believe the Bank of Japan may take more action at its next policy meeting, on April 28, by which time there will be more data about the quake’s effect on the economy. There should also be more clarity by then about how the government plans to finance reconstruction.
Statistical data so far have only partially captured the effect of the quake and the crisis at the quake-stricken Fukushima Daiichi nuclear power plant, which began later in March. Four weeks after the calamity, it still remains unclear how lasting and widespread the disruption to manufacturing will be. There is also little evidence as yet of how consumer sentiment — a key factor for the economy’s future trajectory — has been affected.
“It is one thing to assess the immediate impact of the quake,” said Masaaki Kanno, an economist at J.P. Morgan in Tokyo. “But the far more interesting question now is what will happen in coming months.”
Power shortages stemming from the nuclear crisis have disrupted activity well beyond the disaster zone, notably hitting the Kanto region, which encompasses Tokyo and the surrounding areas and accounts for about 40 percent of gross domestic product, Mr. Kanno said.
That, in turn, has affected supply chains, with some factories running short of parts needed in their manufacturing processes.
The full extent of the disruption remains difficult to gauge. Analysts say the next few weeks will shed more light on whether supplies will return to normal levels and whether companies are managing to obtain key parts from elsewhere. Many of the analysts, however, say they are growing more optimistic that the supply pinch will mean bottlenecks for individual companies and sectors, rather than the widespread gridlock that some had feared earlier.
The governor of the Bank of Japan, Masaaki Shirakawa, said Thursday that he was confident the supply constraints could be resolved by June or July, Reuters reported.
In the longer term, a marked rebound is likely to be felt once reconstruction activities have started and power supplies have begun to return to normal. Some economists say that could happen during the current quarter, though others say it may not get under way until later in the year.
“There will be a short-term impact in the second quarter of this year,” said Stephen Schwartz, a regional economist at the Spanish bank BBVA in Hong Kong. “But as long as the nuclear issue is contained, the outlook for the next quarters looks considerably better.”
BBVA is in the process of revising its full-year economic growth forecast from 1.5 percent to 1 percent but remains “reasonably upbeat” on Japan, he added.
Article source: http://feeds.nytimes.com/click.phdo?i=45717f6c16abb2b1ecd6ea113a4361f2
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