Japan reported its first monthly trade deficit in 26 years yesterday, after exports to the US plunged last month, dousing hopes of a quick recovery in Asia’s largest economy.
The gloomy data added to fears of a recession in Japan, which has relied on brisk demand for its cars, electronics and other goods to power an economic recovery from a slump stretching back more than a decade.
Japan logged a trade deficit of ¥324.0 billion (US$3.05 billion) last month, compared with a year-earlier surplus of ¥743.65 billion, the finance ministry reported.
Excluding the month of January, when exports tend to be slow because of the New Year holidays, the last time the trade balance fell into the red was 26 years ago.
IMPORTS BY VALUE
Imports rose 17.3 percent by value on soaring oil costs. Exports edged up just 0.3 percent as shipments to the US and Western Europe tumbled.
“There is no prospect of a recovery in Japan’s economy in the foreseeable future as the financial crisis is expected to continue,” said Yoshikiyo Shimamine, chief economist at Daiichi Life Research Institute.
“Even though the surge in commodity prices is beginning to ease, declines in exports might spread to the rest of Asia, which had been one of the main drivers of Japan’s growth in recent years,” he said.
The weak global economic climate contributed to the lackluster trade performance last month.
WEAK FIGURES
Exports to the troubled US economy tumbled 21.8 percent, down for a 12th consecutive month. Shipments to the EU fell 3.5 percent. Exports to the rest of Asia rose 6.7 percent.
The global economy is worsening because of the financial crisis, causing US-bound exports to weaken, Japanese Economic and Fiscal Policy Minister Kaoru Yosano said.
But Yosano, who was reappointed to his post on Wednesday by new Prime Minister Taro Aso, said the trade deficit should be “a temporary phenomenon.”
“This doesn’t mean that the Japanese economy is seriously ill,” he said.
Soaring energy costs continued to pressure the trade balance. Imports of crude oil jumped 64.3 percent by value.
REGIONAL DRIVER
Japan has enjoyed brisk exports in recent years, helping Asia’s largest economy to recover from the “lost decade” of economic stagnation and deflation.
But the Japanese economy shrank last quarter, stoking fears of a recession.
The latest data “reconfirmed slowing global demand,” UBS economist Akira Maekawa said.
Aso has pledged to kick-start Japan’s economy, the second largest in the world, through government spending, suggesting fiscal reforms will be put on the back burner.
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