Japan's January trade deficit at its worst since WW II
25 Feb 2009
Japan, the world's second-largest economy posted its largest ever trade deficit of a record $9.92 billion in January, its exports battered by the global economic slowdown. Japan is facing its worst ever recession since WW II.
With exports plunging 45.7 per cent in January from a year earlier and a record 35 per cent in December, the trade deficit rose for the fourth straight month as recession in the US and EU saw Japanese export of electronics, vehicles, auto parts, and semiconductors decline to its largest ever level since the past 28 years.
The data released by the ministry of finance showed that exports were down to $36.8 billion and imports dipped by 31.7 per cent during the month and the figures were worst since the 14-month period from July 1979 to August 1980.
Although it still holds a trade surplus with the US, it recorded its sharpest decline in 23 years as it slipped by 75 per cent in January to 52.9 per cent from a year earlier after a record 36.9 per cent fall in December.
Exports to Asia plummeted 46.7 per cent with a continued trade deficit with China for a fifth consecutive month as exports fell by 45.1 per cent reflecting China's economy is also on the decline as Japan's declining exports to the US and the EU were earlier offset by exports to China.
Japan's trade deficit was $6 billion in January thereby putting the balance of trade with Asia into negative territory for the first time in three years, at $4.6 billion.
The Japanese economy saw its exports drop for the third straight month in December, plunging 35 per cent from a year earlier, which is the biggest decline seen since 1980, and broke the previous month's record decline of 26.7 per cent. (See: Japan's exports plunge 35 per cent in December)
With consumer spending being choked from every continent and recession biting very hard in the US, Europe and certain parts of Asia, especially Japan, Prime Minister Taro Aso has called the recession ''once in a 100 year crisis.''
This month, new data showed that its economy shrank at an annualised pace of 12.7 per cent in the fourth quarter, the worst also since the oil crisis of 1974. The nation's economy contracted for three quarters in a row, the first time in seven years and although Japan was bracing for bad news, the contraction surpassed the 11.6 per cent estimates of analysts. (See: Japan's economy slides to its lowest since WW II)
Its economy shrunk by 3.3 per cent from the third quarter into the fourth quarter; the results were far worse than the US, which contracted by 1 per cent and the EU by 1.5 per cent.
Speaking at a news conference, Kaoru Yosano, Japan's economic and fiscal policy minister said at that time "This is the worst ever crisis in the post-war era, there is no doubt about it."
Japan's manufacturers said that output will fall 9.1 per cent in January and a further 4.7 per cent in February on fears that the economic downturn could be the longest and possibly the deepest that the country has faced in recent times.
The Japanese government opened a 1.5 trillion yen ($16.7 billion) sustenance package to companies threatened by the global financial crisis, in a move to ease the credit crunch, the dwindling economy from bankruptcies and in the wake of massive job cuts by companies. (See: Japan opens $16.7-billion package for small companies)
As politicians in Japan fiddle around with another stimulus package, none in the unpopular government seems to have any idea of how to turn around the Japanese economy which is spiraling into the steepest fall in GDP over 35 years.