Boost for G7 yet Japan hit by quake

Julian Harris
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ACCELERATING private sector investment and growing international trade are boosting G7 economies, data from the Organisation of Economic Co-operation and Development (OECD) showed yesterday.

“The outlook for growth today looks significantly better than it looked a few months back,” said OECD chief economist Pier Carlo Padoan.

“Growth perspectives are higher all across the OECD area, and the recovery is becoming self-sustained, which means there will be less need for fiscal or monetary policy support.”

Growth in the G7 economies outside Japan could rise to an annualised rate of about three per cent in the first half of 2011.

However, Japan faces a severe economic knock from the natural disaster that struck in March.

“The full cost of the disaster is not yet known, but the authorities’ preliminary estimate is that the loss of physical capital amounted to 3.3 to 5.2 per cent of annual GDP,” it said.

Growth in Japan could be hit by up to 0.6 per cent for the first-quarter of the year and up to 1.4 per cent from April to June, the OECD calculated.

The findings mirrored warnings from Capital Economics, which yesterday disclosed forecasts of a 1.5 per cent GDP contraction for Japan in 2011, and 1.5 per cent fall in GDP for the fiscal year from April to March.