Japan's exports reach three-year low as recession looms
2012-11-21 17:13:27
Japan is suffering its worst year for exports since the global contraction in 2009 as Europe's crisis, China's slowdown and a diplomatic dispute with the Chinese hurt the nation's manufacturers and deepen the risk of a recession.
Shipments totalled 53.5 trillion yen (S$800 billion) for January through October, down 2.3 per cent from the same period last year, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo today.
The trade deficit for this year so far is a record 5.3 trillion yen.
The so-called hollowing out of Japan's export champions, highlighted by a cut in Panasonic's debt rating to one step above junk status by Moody's Investors Service yesterday, underscores the urgency of kindling domestic demand.
Japan's political parties are facing off ahead of an election next month on how hard to press the central bank to boost stimulus.
"There's no doubt that Japan's economy is already in a recession," said economist Kiichi Murashima at Citigroup. "Political pressure for further monetary easing is building, and we expect the Bank of Japan (BoJ) to take additional measures in January."
The yen slid to a seven-month low after the trade data were released, falling to 81.92 as of 11.10am in Tokyo (10.10am in Singapore) from 81.67 before the report.
The Nikkei 225 Stock Average was up 1.1 per cent, heading for its fifth gain in six days amid speculation that the opposition Liberal Democratic Party, led by Mr Shinzo Abe, will form the next government and push the BoJ into increased stimulus that weakens the yen.
Exports in October fell for a fifth month, down by 6.5 per cent from a year earlier and leaving a trade deficit of 549 billion yen, the Finance Ministry said.
That compared with the median forecast of 25 economists for a 4.9-per-cent decline.
Shipments to China, Japan's largest export market, fell by 11.6 per cent as a territorial spat over islands in the East China Sea takes its toll on the US$340-billion (S$417-billion) trade relationship between Asia's two biggest economies.
Exports to the European Union fell by 20.1 per cent on-year, while those to the US were up 3.1 per cent.
"The slump in exports will probably continue this quarter," said economist Yuichi Kodama. "China's economy probably hit a bottom in the July-September period, but its recovery may be limited this quarter and there's no sign that Chinese consumers will stop boycotting Japanese cars."
Japan's exports for the first 10 months of this year are the lowest for the same period since 2009, even including last year, when the earthquake in March and flooding in Thailand crimped production at Japanese manufacturers.
While the yen is at a seven-month low, it is still more than 30-per-cent higher than five years ago, hurting exporters' profits.
Japan will probably slide into recession this quarter on weakness in domestic consumption and the decline in exports, which account for about 15 per cent of the economy.
Gross domestic product shrank an annualised 3.5 per cent last quarter and the economy may contract a further 0.4 per cent in the final three months of this year, the third technical recession since 2008, according to a Bloomberg News survey of economists.