Almost a year on, after the March 11 disasters, the Japanese economy continues to be battered by the impact of the quake and tsunami, and especially the Fukushima nuclear power station crisis.
The government yesterday said it would pump billions of dollars more into the station’s owner Tokyo Electric, to keep it solvent, hours after official data showed the economy experienced a sharper than expected slump in the December quarter.
The economy contracted by 0.6% from the December three months, for an annual rate of 2.3% (1.3% was forecast).
That was after the impact of higher fossil fuel import costs and the impact of the high yen cutting exports, forced Japan’s trade account into the red for the first time in decades in 2011.
The slump in growth will be high on the list of topics at today’s monetary policy meeting of the Bank of Japan in Tokyo.
Some analysts say the central bank add to its existing spending aimed at boosting the economy and making sure it returns to growth.
While exports and production have mostly recovered from the quake and tsunami last March and the costly rebuilding of coastal north eastern Japan expands, the Fukushima debacle shows no sign in relaxing its grip over the economy, the government and business.
All but three of Japan’s 54 nuclear stations are now closed for inspection and maintenance, or are being prevented from being brought back on line by powerful local governments.
The shortfall in nuclear power has forced the country to expand or reactive existing or out of service fossil fuel powered stations, meaning a surge in the cost of LNG imports in particular.
So much so that combined with the impact of the strong yen, Japan had a trade deficit, last year, the first for decades.
Australia is a direct beneficiary of those higher exports with shipments of LNG up on a year ago to meet the rise in demand from Japanese power companies.
And, while the Fukushima power station been shut, it has not being cooling properly with a worrying spike in heat from the Number 2 reactor.
Yesterday, the Japanese government decided to provide more money into Tokyo Electric Power Company (Tepco), the owner of Fukushima, to keep it solvent.
The aid though, will only be paid once the company agrees to be nationalised by the government via a separate capital injection.
Until that happens, the government will not otherwise accept the business revival plan the utility is to submit by the end of March.
TEPCO needs tens of billions of dollars of financial aid to cover compensation payments to victims of the nuclear disaster at the plant and for alternative thermal power generation in place of nuclear energy, which os hurting the company and the economy.
Providing that it acquires the voting rights, the government has decided to give the utility 690 billion yen ($A8.3 billion) in additional financial aid to be used for compensation payments.
Once the company is nationalised, banks may provide more loans to Tepco, which already has huge debts.
Last night Tepco widened its forecast net loss for the fiscal year ending in March, to 690 billion yen 9($A8.3 billion) from 600 yen. The company lost 1,250 billion ($A15 billion) last year.
The decision will bring the total amount of financial aid to the utility to 1.58 trillion yen (more than $A19 billion).
The extra aid was decided on after the compensation coverage was expanded in December to include 1.5 million people who have voluntarily evacuated their homes in Fukushima prefecture, the location of the plant, in addition to some 110,000 who were forced to leave their homes under mandatory evacuation orders.
The decision on the aid allowed Tepco to maintain a sufficient capital cushion, keep it listed on the Tokyo Stock Exchange and report its April-December earnings results late yesterday, a day before the official deadline for results in Japan.
The news came after the release of the first estimate of December quarter economic growth showing the surprise contraction of 0.6% from the December quarter.That was double the 0.3% drop forecast by market economists.
The strong yen, the impact of the Thai floods, wreak demand and the continuing disruption caused by the Fukushima crisis were said to be the major factors.
The contraction followed a revised 1.7 % expansion in the three months to last September, up from 1.4%, quarter on quarter.
On an annual basis the September quarter was revised up to 6.8% from 5.6%, so the slowdown in the December quarter was particularly sharp.
Economists say it would not surprise for the first estimate for the December quarter to be changed in the next couple of months as more data comes in.
The 0.6% fall was double the 0.3% drop forecast by market economists.
Overall, 2011 saw a 0.9% slump in growth, the first contraction in two years since the collapse of US investment bank Lehman Brothers late 2008.
Last week current account data for December and 2011 showed the problems the economy is facing at the moment.
While the current-account surplus widened to 303.5 billion yen ($US3.95 billion) in December, the merchandise trade account saw its first annual deficit in almost half a century.
The current-account surplus was up from 138.5 billion yen in November but much smaller than the December, 2010 figure of 1.198 trillion yen.
The trade deficit was 145.8 billion yen, down from November’s 585.1 billion yen.
Exports for December were down 7%, as imports rose 9.8%. Exports for the year fell 1.9% while imports jumped 15%, thanks to the higher energy shipments.
For all of 2011, the trade account saw a deficit of 1.609 trillion yen (over $A19.3 billio
