The "new normal" reinforced

As the dust settles on Japan, a clearer picture of the impact on the global economy is starting to emerge. The third largest economy and roughly 9% share of the world capitalization, the troubles in Japan, when combined to the ongoing debt crisis in Europe and growing tensions in the Middle East is likely to shave at least a percentage point from global economic expansion this year. Oil has once again broken the $100 barrier, reflecting not only the potential supply issues emanating from the Middle East but also Japan's woes as it contemplates switching to oil as a substitute to the shortfall created by the loss of nuclear power. As a rule of thumb, a 10% rise in oil typically shaves around 0.2% of growth.
But Japan's troubles stretch further than just oil. Japan is a major supplier of components for both the electronics and car industries. In the near term the shortfall in production will translate into a rise in component prices. For firms that don't have substitutes for the components, this will translate into reduced production.
Finally, the impact of uncertainty on businesses should not be underestimated. Typically when faced with uncertainty on the economic front, businesses tend to postpone projects and investments which will invariably have an impact on growth.