GO
Loading...

Earthquake May Boost Economy Short Term: Summers

Friday's massive earthquake is yet another challenge to Japan's recovery but it may provide a jolt to the economy over the short term, Lawrence Summers, president emeritus of Harvard University and former director of the White House National Economic Council, told CNBC.

The biggest earthquake in 140 years hit Japan Friday, triggering 10-meter high tsunami waves.

"If you look, this is clearly going to add complexity to Japan's challenge of economic recovery," Summers said. "It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place."

After the Kobe earthquake in 1995 Japan actually gained some economic strength due to the process of reconstruction, he added.

The global economy is more resilient than many people think and is not likely to be massively affected, he said, recalling that the events in the fall of 2008 were "traumatic" but the global economy recovered faster than expected.

"I think one has to recognize always and especially right now that there are an impressive magnitude of uncertainties," Summers said "I'm relatively optimistic because I believe there is substantial energy in emerging markets, because I believe in the US the consumer is starting the process of coming back," he added.

Banks

  • Richard Kovacevich in 2007.

    There were only 20 banks that caused the crisis, and "they're all gone," former Wells Fargo CEO Dick Kovacevich told CNBC.

  • How much the banking industry has changed since the collapse of Lehman Brothers, with Richard Kovacevich, Wells Fargo former chairman and CEO.

  • How much of a game changer is Apple Pay? Max Wolff, Manhattan Venture Partners chief economist, and Hans Morris NYCA, discuss the mobile pay ecosystem and why Apple Pay will succeed where others failed.