Japan's Economic Affect on Global GDP

According to Roubini Global Economics a 3 percent decline in Japanese Gross Domestic Product equates to a .3 percent reduction in global GDP. The Japanese economy officially entered a recession when it reported a second quarterly decline in GDP; Q1 2011 GDP declined .09 percent and an estimated 3.7 percent drop for the year according to Roubini.

Morgan Stanley forecasted a 4.2 percent global GDP for 2011 in May 2011, however this may not have included the Japanese GDP news that came out on the 19^th of May. If it does, that would make global GDP rise 3.83 percent assuming no previous pricing in. The World Bank puts 2011 real global GDP at 3.3 percent and the Conference Board estimates a 4.5 percent growth. This growth is good, however it is being driven by emerging economies.

Whether or not this will affect national economies such as the U.S. in a good way will be determined in part by how well U.S. Corporations are able to capitalize on international business opportunities where the growth is. A low U.S. GDP in 2011 would consequently seem to indicate an inability to take full advantage of those opportunities. The result of which will likely directly affect main street, employment and potentially business investment.

The U.S. Economy is forecasted to grow 2.6 percent by the Conference Board, however it also states Japan's 2011 GDP will be 1.7 percent. Perhaps this particular conference Board assessment is overly optimistic. The U.S. Economy is forecasted to grow about 2.9 percent according to a UPS assessment cited by Morningstar.