Following last Friday’s earthquake and tsunami we are cutting our Japan GDP growth forecast for CY 2011 from 1.0% to zero. We were already expecting GDP to contract for a second successive quarter in the first three months of 2011 and now expect this recession to be extended at least until the middle of the year. The likely boost from reconstruction spending means that we are raising our CY 2012 forecast from 1.0% to 1.75%, but our figures for both years remain (well) below consensus.
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