Japanese economy won't collapse: Ernst & Young CEO
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The Japanese economy would not collapse despite the triple strike of earthquake, tsunami and radioactive leaks, Ernst & Young Chairman and Chief Executive Officer James S. Turley said here Thursday.
In the short term, the calamities would do serious harm to the Japanese economy and trade, in particular the supply of auto parts and computer chips, but it would not collapse and the world economy would not enter a double-dip recession, Turley told a media conference.
Once the leaks from the nuclear power plants damaged by the tsunami were under control, the need to rebuild the devastated areas of Japan would stimulate infrastructure development and increase employment, which would offset the financial losses from the disaster quite quickly, he said.
Currently, many countries face an increasing risk of high inflation. Their economic recovery is relatively fragile and must now deal with high oil prices and the negative impact of the Japanese earthquake.
On the possibility of stagnation, Turley said: "Although the world economy is facing complex risks and uncertainties, it still maintains a 'LUV' recovery, and there is no risk of stagnation."
"'L' is the shape of the European recovery, relatively flat. 'U' is North America. It has already been recovering, and it will accelerate in future. 'V' is other economies, including emerging markets, a relatively strong rebound," he said.
China's average annual growth rate for the past five years is 11.2 percent. Premier Wen Jiabao forecast in the government work report recently an average annual growth rate in the next five years of 7 percent.
In this regard, Turley said it showed the Chinese government had focused more on decreasing inflation and asset bubbles. Turley also noted China's efforts on the improvement of people's livelihoods and the increase of the minimum salary.
Turley expected the manufacturing industry to continue to be the core of Chinese economic growth in the next five years, but the proportion of export-oriented manufacturing would decrease, and domestic consumption and the service industry would increase their proportion.
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