The earthquake, tsunami and ensuing damage to nuclear power plants that rocked Japan in early March were blamed for a good chunk of the slowdown that hit the U.S. economy this spring. But now Moody’s Analytics is reporting that half of the loss of output in Japanese economic and industrial activity resulting from the disaster has rebounded, and the outlook for 2012 is for 3.2% growth.

Tu Packard, a senior economist at Moodys Analytics, told On Wall Street that many of the suppliers of critical parts to U.S. industrial companies -- particularly the auto industry -- which had been shut down by either the earthquake or by the loss of electrical power following the Fukushima nuclear plant meltdowns are now back in production.

That is certainly going to be good news for many U.S. companies. Several U.S. auto plants had to be shuttered because of shortages of chips for on-board computers and special paints, transmissions and other sole-sourced parts. 

Packard said that half of the rebounding growth in Japan is the result of reconstruction efforts in the shattered northern part of Honshu Island. 

“That reconstruction boom will also be a big help to Japan’s trading partners, including the U.S.,” she said, “because to the extent that Japan has to import construction materials like cement, steel and lumber, that is good news for exporters in countries like the U.S.”

She added that the renewed economic growth in Japan, as well as a marked reduction in the amount of electricity being generated by the country’s troubled nuclear plants, means more imports of oil and gas, virtually all of which must be imported.

While the Moody's report on Japan is mostly positive, the ratings agency analysts are critical of the Bank of Japan, which they say is being too passive about the country’s deflation and the strength of the yen, which Packard said is “way too strong for the state of Japan’s economy.”

She also said that the central bank should emulate the U.S. Federal Reserve Bank in monetizing some of the country’s huge national debt by buying Japanese debt -- a move that would help re-inflate the yen and also make Japanese exports more competitive on global markets.

“The Bank of Japan is the only institution that has the means to fight deflation, and their response to deflation has not been as vigorous as it should be,” she said.