Japan's trade surplus plunged 36.1 percent in June from a year earlier as the global economic slump weighed heavily on foreign demand for Japanese high-tech products, the finance ministry said yesterday.
The trend, which economists said was likely to continue through the rest of the year, is expected to continue to depress Japan's economic growth.
Japan's trade surplus in June fell to ?761.7 billion (US$6.19 billion), marking the 12th consecutive monthly decline, the ministry said. Exports in the month fell 7.8 percent to ?4,136.7 billion, while imports grew 2.4 percent to ?3,375.0 billion, the ministry said. Japan's politically sensitive trade surplus with the US dropped 8.3 percent to ?586.1 billion.
US-bound exports fell 4.6 percent to ?1,234.9 billion and imports fell 1 percent to ?648.8 billion.
"It appears that the ongoing trend of import growth outpacing export growth will continue for the time being," a ministry official said.
Falling demand for Japanese-made semiconductors, electronic devices, and ships dragged down exports while strong Japanese domestic demand for audio-visual equipment contributed to the rise of imports, the ministry said in a statement.
Japan's trade surplus was likely to continue to shrink throughout the rest of the year.
"The recovery of the US economy is really the key to improving demand for Japanese products overseas," said Junji Ota, economist at Okasan Research Institute.
"We initially thought the US economy would start to pick up in the July-September quarter. But now we are thinking that the recovery might come in the following three months," he said.
"If and when the US economy recovers, especially the information technology sector, Japan's economic recovery will also pick up," Ota said.
Masaaki Kanno, chief Japan economist at JP Morgan Securities Asia, agreed.
"The data shows that the global economic slump, triggered by the slowdown of the American manufacturing sector, is continuing," he said.
"The Japanese economy will not recover until the American economy rebounds," he said.
Kanno said the delayed recovery of the US economy is likely to pressure Japan's gross domestic product figures for the June quarter.
"I expect GDP to fall, and I am not sure if the fall will have been halted in the July-September figures. It may continue to fall through the year," he said.
The government said last month Japan's GDP fell 0.2 percent in the three months to March.
During the year to March, Japan's GDP grew an anaemic 0.9 percent, falling well short of the government's goal of 1.2 percent economic growth.
Japan's trade surplus with the rest of Asia nosedived 45.6 percent year-on-year to ?276 billion in June, with exports falling 9.4 percent to ?1,713.5 billion and imports rising 3.8 percent to ?1,437.5 billion.
The trade surplus with the EU plunged 31.2 percent to ?221.5 billion, as exports fell 11.1 percent to ?632.9 billion and imports climbed 5.6 percent to ?411.4 billion.
"Despite the slowdown of the domestic economy, the level of imports has held relatively steady. Structurally, it is difficult for Japan to lower imports," Ota said, saying many Japanese manufacturers import parts from manufacturing bases overseas.
RSS