According to a report from Japan’s Kyodo News Agency on August 15, Japan’s real gross domestic product (GDP) in the second quarter showed negative growth for the third consecutive quarter, mainly due to the sharp decline in production and consumption following the Great East Japan Earthquake. Although the GDP growth rate of production recovery in the third quarter is expected to rebound sharply, the recovery of Japan’s economy is likely to face uncertainties due to the multiple attacks of the historic appreciation of the yen and the deceleration of overseas economies.

The production activities of enterprises are improving month by month with the recovery of the supply chain. The production of machine tools and other industries recovered to the pre-earthquake level in February as of June. Exports and consumption are gradually improving.

According to the average forecast of 42 private economists estimated by external cabinet organizations, the annual growth rate of GDP in the third quarter is expected to have a V-shaped reversal of 4.6%.

On the other hand, the turmoil in financial markets, such as the historic appreciation of the yen caused by the European and US debt problems and the slump of global stock markets, and the global economic slowdown are casting a shadow over the Japanese economy. In particular, the weakening of the U.S. economy may affect the Japanese economy through the reduction of U.S. exports.

According to the report analysis, although the current post-disaster reconstruction in Japan is worth looking forward to domestic demand, if the exchange rate of the Japanese Yen is high for a long time, the company may accelerate the pace of its overseas transfer. The government must plan ahead and provide preferential policies to the companies that stay in the country. And other measures to prevent industrial hollowing out.