Tags: Lawrence | Summers | Quake | earthquake | Short-Term | Boost | Japanese

Summers: Quake Could Bring Short-Term Boost to Japanese Economy

Friday, 11 Mar 2011 09:39 AM

The massive earthquake that rocked Japan could provide a welcome jolt to the economy there, at least in the short term, says Harvard University and former director of the White House National Economic Council Lawrence Summers.

Rebuilding there may create jobs.

"If you look, this is clearly going to add complexity to Japan's challenge of economic recovery," Summers tells CNBC.

"It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place, " Summers said.

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Lawrence Summers
After the Kobe earthquake in 1995 Japan actually saw economic gains through rebuilding, Summers said.

Taking a broader view, Summers says the global economy is not as bad off as many people think and might not be too affected by the quake.

"I think one has to recognize always and especially right now that there are an impressive magnitude of uncertainties," says Summers.

"I'm relatively optimistic because I believe there is substantial energy in emerging markets, because I believe in the U.S. the consumer is starting the process of coming back," he added.

Still, the quake will close businesses and factories across Japan and will affect the economy.

"There are car and semiconductor factories in northern Japan, so there will be some economic impact due to damage to factories," says Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo, according to Reuters.

The quake rocked the world's third-largest economy, which was just showing signs of life after shrinking in the final quarter of last year.

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The massive earthquake that rocked Japan could provide a welcome jolt to the economy there, at least in the short term, says Harvard University and former director of the White House National Economic Council Lawrence Summers. Rebuilding there may create jobs. If you...
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