Japan's Kyushu region to lose 3.4 million USD in production output due to quakes: research center

Following the powerful earthquakes that battered Japan's southwestern region last month, the Kyushu Economic Research Center (KERC) said Thursday it has estimated the area could lose 0.7 percent of Kyushu's 2012 gross domestic product.

Kyushu island, Japan's third-largest, stands to see its overall output plummet by 370 billion yen (3.4 billion U.S. dollars) in the fiscal year that began April 1, Kyodo News quoted KERC as saying, as a result of the quakes that were centered in and around Kumamoto Prefecture.

According to KERC, the slump in production will be owing to a significant drop in consumption, estimated to fall by as much as 230 billion yen.

Production in the region has been hampered by both direct and indirect effects of the quakes on Kyushu's infrastructure and local economies, with damage to manufacturing and farming equipment, along with impairment to agricultural and fishing industries, likely to drag down output by up to 64 billion yen, the research center said.

It added that disruption to parts supply chains could add a further 39 billion yen to production output losses in the quake-hit region, while a slump in tourism could cost the area as much as 36 billion yen.

The Japanese government this month enacted a 778 billion yen (7.07 billion U.S. dollars) extra budget for fiscal 2016, with the funds earmarked for the reconstruction and restoration of regions in the southwest still reeling in the aftermath of the quakes.

Japanese Prime Minister Shinzo Abe's Cabinet initially approved the supplementary budget on May 13, with the budget not coming from the issuance of new bonds.

The government has said that it will take advantage of low interest payments for state debt from accommodative rates following Japan's central bank plunging its interest rate into negative territory in January to release more money into markets.

Government officials have said that 700 billion yen in reserve funds will be allocated at the Cabinet's discretion, with this amount being made available to help rebuild small and medium-sized businesses, as well as to restore damaged infrastructure and devastation caused to agricultural facilities.

The rest of the funds, around 78 billion yen, will be used to help the quake-affected people directly by supporting livelihoods, and building and operating temporary evacuation buildings, the government has said.

The Kyushu Economic Research Center was established to engage in wide-ranging research on the socio-economic conditions of the Kyushu region and as well as research activities. It also involves itself in making proposals and offering strategies for the development of the region. Endit