Japan’s growth will barely be affected by the earthquake and tsunami, and the economy may even expand faster than expected, its economy minister believes, as spending on rebuilding shores up output.

Kaoru Yosano, minister for economic and fiscal policy, played down the economic damage from the disaster, saying the worst- affected areas – Iwate, Miyagi and Fukushima prefectures – together accounted for only 4.1 per cent of gross domestic product. Even assuming that a third of economic capacity in those prefectures was wiped out, that would represent a loss of output of just 1.2 per cent of Japan’s GDP, Mr Yosano told the Financial Times.

Spending on reconstruction was likely to add 1-2 percentage points to GDP, he calculated. Even on the worst-case scenario, therefore, the loss to GDP would amount to no more than 0.1-0.2 per cent, he said, quoting private economists, and growth could actually be higher than the 1.5 per cent originally forecast for fiscal year 2011. “It is far from what is being reported that the Japanese economy is in a miserable state,” Mr Yosano said.