Mohamed A. El-Erian Believes In Japan's Recovery

Japans first step to recovery and their main focus right now is the protection and safety of its people. The devastating earthquake and tsunami that happened last Friday destroyed where people work, live, and go to school. It is going to take some time for them to rebuild after this great disaster and it will defiantly take some help from others to prevent to much of a negative impact on the global economy.�

Last Friday Japan experienced the worst earthquake in record history and the effects will soon ripple to the rest of the world as Japan is currently one of the� central parts in the expansion of the global economy, "they generate lots of new jobs and enhance productivity", stated Mohamed A. El-Erian.

Mohamed El-Erian says that while the people located in Japan were the first to be impacted by the tragedy, everyone world wide will soon feel its presence economically. From past experience in other countries, he believes that the economic outlook will be dominated by five factors.

1. Japan’s economic growth rate will fall in the immediate aftermath of the
   natural disasters before rising sharply due to reconstruction
   activities.
2. Disruptions to supply chains and the loss of inventories will cause
   shortages and inflation to spike temporarily from very low levels.
3. The fiscal deficit and public debt will rise meaningfully due to lost revenues and, more importantly, emergency spending.
4. The fiscal deficit and public debt will rise meaningfully due to lost revenues and, more importantly, emergency spending.
5. Last, the country will receive transfers from abroad, including the
   repatriation of funds held outside the country by Japanese residents.

Japan is a rich country with the option to borrow at relatively low interest rates says Mohamed El-Erian. This along provides the country with a chance to rebound quickly, but with the disaster being so destructive other countries are not hesitating on stepping in and helping out as much as they can. Many governments and individuals have already put together donations, equipment, money, and volunteers together to send over and contribute to aid in the recovery.

Mohamed El-Erian comments that the greatest feeling that people around the world right now are feeling is empathy. People understand the magnitude of the earthquake that was soon followed by a great tsunami, and the impact that it had over Japans people and their land. He commented that on a lighter note, this may bring change to Japan's internal political unity, which hasn't been the best after two decades of disappointing performance.

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