The effects of the earthquake and tsunami that devastated Japan in March continue to ripple through the country’s industry, infrastructure and economy. Japan’s is an export-driven economy, and low consumer confidence, coupled with infrastructure challenges, is taking a toll. The latest reports show Japan has slipped into a recession, with January-March GDP falling 0.9 percent.

Manufacturing is faltering with inconsistent power supplies and shortfalls in materials (steel production, for example, has dropped significantly). As a result, auto manufacturers are reporting declining profits, with car exports falling 27.8 percent year over year. Shipments of electronics and semiconductor products have also fallen, by 6.9 percent. Energy shortages, which may increase when power demand peaks during the summer months, hamper manufacturing and a return to normal operation.

Despite the domestic challenges recovering from the earthquake and tsunami, foreign economies continue to recover from the Great Recession, meaning international demand for Japanese products – particularly auto parts – could help the country’s economy. And while consumer confidence in Japan is weak, some manufacturers are taking steps to bolster foreign confidence. In light of the nuclear accident at the Fukushima power plant, Japanese automakers have started checking radiation levels on cars for export to lessen concerns among foreign consumers.

Japan’s air transport market accounts for 10 percent of the industry’s annual revenue and about a fifth of overall cargo traffic in the Asia-Pacific region. As a result, impacts on the Japanese air cargo industry are felt by the international air cargo community, and the stalled growth in demand for air cargo services in March is primarily the result of the disaster in Japan.

Yet, several Japanese manufacturers have reported they will return to normal production by the end of the year, and with major funding from the Japanese government in reconstruction efforts, it seems the country is on track to overcome current challenges.