From early 2011, Japan’s economy had emerged from the pause since autumn 2010. The earthquake disaster struck the economy when it was about to regain recovery momentum. The earthquake, tsunami, and accident at the nuclear power plant have changed the situation significantly, and Japan’s economy is currently facing strong downward pressure.
Let me note that industrial production for March decreased by 15 percent on a month-on-month basis, the largest one-month drop on record. The recent sharp and substantial economic plunge is similar to that following the failure of Lehman Brothers but different in terms of its mechanism: the recent downward pressure is caused by a supply-side shock.