Growth in Japan's gross domestic product (GDP) will slow to 0.8 percent through 2011 because of the earthquake and tsunami that devastated parts of the country, the Organization for Economic Cooperation and Development said Thursday.
The March 11 disaster brought massive economic problems to the Asian country, the OECD said in a report citing Japan's official damage estimates of between 3.3 percent and 5.2 percent of 2010 GDP.
"In addition to the usual risks related to the strength of world trade, exchange rates and commodity prices, there is great uncertainty about developments in Japan, including the duration of electricity shortages," the report added. "Consequently, the timing and strength of an economic rebound is exceptionally difficult to forecast."
The damage to capital stock, electricity shortages and the disruption of supply chains was projected to significantly reduce output in the second quarter of 2011, the OECD said.
Nevertheless, the OECD maintained a positive outlook for Japan's recovery, predicting that the following active reconstruction will quicken the economic growth to an increase of 2.3 percent in 2012.
"The experience of past disasters in Japan and other developed countries suggests that the negative short-term impact on economic output will be followed by a rebound as reconstruction spending picks up," the OECD report said.
"Output is expected to rebound sharply from the third quarter of 2011, driven by reconstruction-related fixed investment," including public investment, business investment and residential investment, the report said.
Excluding an "extended downturn," the OECD also indicated signs of a pick-up in trade in the Asian region, which accounts for 56 percent of Japanese exports.
Based on the reconstruction spending amount in response to the 1995 Hanshin-Awaji (Kobe) earthquake, the OECD assumed a reconstruction spending plan to be correspondingly valued at 5.6 trillion yen (68.34 billion U.S. dollars), or 1.1 percent of GDP, through the end of 2012.