Earthquake law sends shudders through construction industry
The new building rules – rushed into law after a scandal over faked quake-resistance data that erupted last year – have, overnight, created a crisis for commercial, residential and public works construction projects across Japan.
Housing starts in Japan plunged by 44 per cent in September, continuing a slump that began with a 43 per cent fall in August. Commercial building starts nosedived by about 25 per cent in September as the new law and a lack of information caused confusion among construction companies.
The grim figures were released on the day that the Bank of Japan finally admitted what analysts had been saying for months: that Japan has not managed to beat deflation. The central bank also revised down its growth forecasts for this financial year and for fiscal 2008, acknowledging the possibility of a negative quarter of growth in the present quarter and a return to technical recession
Mired in delays, and the risk that existing projects will be “disapproved” by the Government, building companies and property developers have stopped building anything.
Hiroshi Shiraishi, an economist with Lehman Brothers, said that the law had effectively destroyed an entire segment of the economy. Construction represents about 3.5 per cent of Japan’s gross domestic product and a knock-on effect is expected in many sectors as demand for furniture, construction materials and home and office fittings dissolves. Describing the law as “ridiculous”, Mr Shiraishi said that the move was “a big mess and typical of a Government that sets policy and makes laws with no consideration of the macro-economic impact”...
Full article: business.timesonline.co.uk
Housing starts in Japan plunged by 44 per cent in September, continuing a slump that began with a 43 per cent fall in August. Commercial building starts nosedived by about 25 per cent in September as the new law and a lack of information caused confusion among construction companies.
The grim figures were released on the day that the Bank of Japan finally admitted what analysts had been saying for months: that Japan has not managed to beat deflation. The central bank also revised down its growth forecasts for this financial year and for fiscal 2008, acknowledging the possibility of a negative quarter of growth in the present quarter and a return to technical recession
Mired in delays, and the risk that existing projects will be “disapproved” by the Government, building companies and property developers have stopped building anything.
Hiroshi Shiraishi, an economist with Lehman Brothers, said that the law had effectively destroyed an entire segment of the economy. Construction represents about 3.5 per cent of Japan’s gross domestic product and a knock-on effect is expected in many sectors as demand for furniture, construction materials and home and office fittings dissolves. Describing the law as “ridiculous”, Mr Shiraishi said that the move was “a big mess and typical of a Government that sets policy and makes laws with no consideration of the macro-economic impact”...
Full article: business.timesonline.co.uk
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