IN THE WAKE of Japan’s cascading disasters, signs of economic loss can be found worldwide.
Container ships sit in the Pacific Ocean or at docks in Japan, wary of unloading tons of pork and steak because of that nation’s fractured electric grid. Any break in the “cold chain” of refrigeration can spoil meat.
LVMH Moet Hennessy Louis Vuitton, the luxury goods maker based in Paris, shut more than 50 of its stores in Japan. And Volvo, the Swedish carmaker, was working with a 10-day supply left of Japanese-built navigation and climate control systems.
“It’s hour-by-hour work to get a grip on the situation,” said Per-Ake Froberg, chief spokesman for Volvo, as it girds for a production halt.
The uncertain economic picture has mirrored the churning developments in Japan as it tries to recover from the devastating earthquake and tsunami that struck it on March 11. On March 19, the government said there were signs of radioactive contamination in some agricultural produce and livestock.
Uncertainty hangs over the global economy. Tsunamis, radioactive plumes, Middle East revolutions, a European debt crisis and a still weakened United States economy could derail a tenuous recovery in the United States, Europe and Japan.
“The problem is not Japan alone ? it’s that Japan reinforces all the negative repercussions,” said Stephen S. Roach, nonexecutive chairman of Morgan Stanley Asia.
Recent economic forecasts of first-quarter global growth near 5 percent now may be outdated.
Economists say the uncertainty created by damaged reactors at the stricken power station in Japan adds to a sense of global foreboding.
In Libya, American missiles are flying and the oil wells stand silent. Saudi troops have marched into Bahrain . In Europe, finance ministers warn that hundreds of banks still carry billions of dollars in bad loans.
A recent survey of prominent global economists found that a majority view it as likely that some combination of Greece, Ireland and Portugal will default on debt and force bond investors to take heavy losses. Oil prices have risen nearly 11 percent this year. Japan already is the largest importer of liquefied natural gas, and as it searches for energy to replace a fractured nuclear grid, analysts expect these prices to rise as well.
Finally, the United States is burdened by a foreclosure crisis and the worst long-term unemployment situation in nearly a century.
“The uprisings, the Persian Gulf, Japan: It’s very likely that the global economic impact will be larger than most people currently imagine,” said Bernard Baumohl, chief global economist with The Economic Outlook Group.
There are some more optimistic forecasts. A report by the World Bank on March 21 predicts that growth in Japan and its East Asian neighbors will pick up in the second half of this year. The country’s past experience, the report said, “suggests an accelerated reconstruction effort” that will limit the short-term impact.
Indeed, Nissan said on March 20 it was about to reopen five of six plants in Japan, and Toyota and Honda are also resuming production. Analysts expect Japan to put together an energy grid that will allow dockworkers to unload shipments.
“Supermarket shelves are pretty empty in Japan; we could see a surge in demand soon,” said David Miller, research director for the Iowa Farm Bureau Federation.
The global economy remains adaptive. But Japanese electronics, auto adhesives and silicon-production facilities require highly skilled labor and cannot take root overnight in another southeast Asian nation.
General Motors announced that it would suspend production at its factory in Shreveport, Louisiana, because it has already run short of Japanesemade parts.
Many European and American companies in Tokyo have had to cobble together supply chains even as they evacuated workers.
Volvo, the Swedish automaker, is the most reliant of the European car companies on Japanese parts - seven of its suppliers are based in the ravaged region. “We are preparing ourselves for a shortage,” Mr. Froberg said.
In Marion, Arkansas, a city just west of the Mississippi River, the fate of a 25-centimeter round gear might seem inconsequential. But the gear, manufactured in Japan and shipped to the Hino Motors Manufacturing plant in Marion, symbolizes the multitude of disruptions affecting supply chains.
The plant imports 20 percent of its parts from Japan. Some suppliers are in Sendai, the northern city that was badly battered. For now, shipments continue to arrive, but no one knows for how long . Managers talk about searching elsewhere for parts, “but our parts are very important parts,” noted Shinichi Sato, treasurer and secretary of Hino’s United States operations.
“So it is not easy to ask other suppliers to produce them.”
THE NEW YORK TIMES
