Japan Earthquake To Impact Economy
Over the past couple of days, the Synergy Merchant Services Blog has been reflecting upon the recent tragedy in Japan. With a disastrous earthquake and tsunami breaking out last Friday, there has been massive devastation in the nation. Of course, the process to begin rebuilding homes, factories and shops in Japan will be a long one.
Today, Josh Rubin of The Toronto Star reports that the earthquake in Japan has “wreaked havoc on the loonie”. However, in a somewhat ironic twist, the rebuilding process in Japan will actually serve to strengthen the Canadian economy. Economists and other analysts, meanwhile, are mixed about the impact this will have on Canada.
Said Brian Bethune, the chief Canadian economist at the U.S.-based economics analysis firm, IHS Global Insight: “In the short term, it’s not good for anybody. There will be decreased imports and exports, supply chain disruptions, and reduced travel.” Rubin notes that Western Canada is usually a popular destination site for Japanese travelers.
While the decrease in tourism will reflect one of the negative impacts the earthquake will have on Canada’s economy, Rubin mentions that “In 2009, the most recent data, there were 85,575 Japanese visitors that spent at least one night in B.C. It is estimated they spent $111 million in total.”
Disruptions in the auto sector will be another result of the earthquake and tsunami in Japan. So evidently, there will be an economic impact in Canada as a result of the disastrous events of last week. Japan, however, is looking at over $200 billion in reconstruction efforts.
Canadian lumber will be in high demand for rebuilding in Japan, writes Rubin. Canada’s reconstruction goods are sure to be sought after to build homes, stores and other buildings in the near future. Bethune also believes that a demand for fuel will actually provide a boost for Canadian commodities suppliers.
Said Paul Beamish, the international business professor at the Richard Ivey School of Business at the University of Western Ontario: “I think this is going to lead to a complete change in the way things are built there, and that will lead to a huge demand for lumber. It’s going to help everybody who supplies construction materials. As horrific as a humanitarian catastrophe as this has been, the reconstruction in some ways will be a massive stimulus.”