Japan has suffered its sharpest fall in exports on record as even previously robust markets hunker down against the shockwaves of the global financial crisis.
The slump in demand for the output of the powerful – and economically pivotal – Japanese export sector comes amid gloomy prognostications about the prospects for the world’s second largest economy.
Japan’s cabinet office yesterday cut its forecast for the third month in a row, declaring that the recession-mired economy was “worsening” in the face of the trade slowdown, falling corporate profits, rising unemployment and weak private consumption. “The economy is likely to continue worsening for the time being,” the office said.
Masaaki Shirakawa, governor of the central bank, warned in a speech that exports were likely to fall further, in part because of the rise of the yen – which hit 13-year highs against the dollar this month – while private demand could also weaken even more.
The “bad economy” is even being felt by Japan’s beefy sumo wrestlers, with an exhibition tour to London planned for next year set to be cancelled because of the strength of the yen and a dearth of sponsors, local media reported.
The yen’s climb is a big factor in declining exports, which slumped 26.7 per cent year-on-year to Y5,326bn ($58.9bn, €42.3bn, £40bn) in November, according to data released by the Ministry of Finance yesterday. Imports fell 14.4 per cent to Y5,550bn – leaving Japan with a trade deficit for two months running for the first time since 1980.
Officials said the November export fall was the steepest since the ministry started keeping electronic records in the late 1970s and that even previously relatively bright spots in the trade data, such as exports to the Middle East and eastern Europe, had been extinguished by almost universal falls in demand.
Japan’s emergence earlier this decade from a long economic slump was powered in large part by exports – particularly to China – but rescue from the same quarter looks a distant prospect this time. Exports to China fell 24.5 per cent year-on-year in November, highlighting the failure of east Asia’s biggest emerging market to find sufficient domestic demand to make up for the difficulties faced by its own export sector.
Japan’s trade deficit may come as some comfort to those economists who believe the country’s past structural surplus played an important role in the global imbalances that fuelled the current financial crisis.
However, with imports also falling fast, Japan is unlikely to play any more than a minor role in driving a global recovery.
Local headlines continue to be dominated by the woes of star companies, with Toyota, the carmaker, yesterday warning it faced its first operating loss in more than seven decades.
Vehicles have been a particular blackspot on Japan’s recent trade data, with car exports down 34.5 per cent in value terms in November – including a fall of 40 per cent in sales to the US.
The government has in recent days unveiled plans to increase spending by 6.6 per cent to Y88,548bn in the year starting in April 2009.
By Mure Dickie in Tokyo
Published: December 23 2008 02:00 | Last updated: December 23 2008 02:00
Source: Financial Times