Japan’s economy faced strong downward pressure, mainly on the production side, due to the effects of the Great East Japan Earthquake that occurred on March 11. The earthquake disaster caused damage to production facilities in a wide range of areas and consequent constraints on the supply of parts and materials led to supply-chain disruptions.
Moreover, serious damage to power generating facilities resulted in constraints on electric power supply. Production declined sharply mainly due to these supply-side constraints and consequently exports fell. Domestic private demand also suffered to a considerable degree, affected in part by a deterioration in business and household sentiment.