It looks like the second half of the “V” shaped recovery of the Japanese economy, the leg up, is starting sooner than expected.
Long time readers of this letter already know that in the wake of the March tsunami that hit Japan there would be an immediate collapse of the Japanese economy, followed by a very sharp rebound (click here for “Japan: Here Comes the “V” and click here for “When to Buy Japan?”).
Industrial production has now risen for three consecutive months. Mitsubishi Electric has revised up its earnings for the rest of the year. Hitachi, the worst affected of the major industrial groups with the largest presence in Northern Japan, is almost back to full operation.
Some analysts credit the rapid recovery to Japan’s unique industrial organization, which encourages cooperation between competitors during times of emergency. I saw the same in the aftermath of the 1995 Kobe earthquake.
Whatever the reason, the upshot for the rest of us will be a positive impact on the global economy. When the earthquake hit, one of the worst effected was not a Japanese car manufacturer, but General Motors, which lost its supply of transmissions for the Chevy Volt and other essential components. Now, if I can only get the missing floor mats for my new Nissan Leaf!