The Japanese government acknowledged for the first time on 23 February that Toyota Motor Corp.’s massive global recall could have a knock-on effect on the world’s second largest economy, which is struggling to overcome deflationary pressures.
Japan downgraded its assessment of exports in its economic report for February, partly because of concerns stemming from Toyota’s recall of more than eight million vehicles worldwide. Toyota’s pole position as the world’s largest automaker means that it is one of the leading exporters in Japan, at a time when the country’s economic recovery is fragile and susceptible to external shocks.
Shipments of cars and automobile parts accounted for around 15 percent of Japan’s overall exports in 2009. According to analysts, if Toyota’s recall issue worsens, the fallout could push Japan’s nominal GDP down by 0.12 percentage point in the future.
(Source: The Wall Street Journal Online)