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TOKYO: Japan's woes from the global crisis deepened Monday as data showed a record drop in exports and the government said for the first time in nearly seven years that the economy was getting worse.
Japan reported a trade deficit of 223.4 billion yen (US$2.5 billion) in November as exports fell at their fastest-ever rate, according to figures from the finance ministry.
The Japanese economy "stepped up the pace of its decline last month but is falling head over heels this month," said Hiroshi Watanabe, economist at the Daiwa Institute of Research.
"Japan has been hit by an unprecedented, sudden change in climate," he said.
The government said in its monthly report that the economy is worsening, the first time it has used such negative language since February 2002.
With industrial production and corporate profits sharply deteriorating, "the economy is likely to continue worsening for the time being," the Cabinet Office report said.
A survey published in the Nikkei economic newspaper found that even large companies were becoming much more pessimistic.
The survey found 99.3 per cent of leaders at Japan's 137 major corporations believe the domestic economy is deteriorating.
Among them, those who said the economy is rapidly worsening soared to 86.8 per cent from just 10.8 per cent in the previous survey in early October, the daily said.
The trade deficit, much larger than the October deficit of 67.7 billion yen, reversed a surplus of 784.4 billion yen a year earlier, even though imports fell for the first time in 14 months.
Japan's imports in November shrank 14.4 per cent from a year earlier to 5.55 trillion yen on lower oil prices, while overall exports tumbled 26.7 per cent to 5.33 trillion yen.
The fall in exports was the steepest decline in comparable data dating back to 1980, the ministry said.
It was also the first time Japan has incurred a trade deficit for two straight months since October-November 1980, when the nation was reeling from an oil crisis.
Japan has enjoyed a large trade surplus since the 1980s thanks to brisk demand for its cars and other goods, but the recent financial turmoil and the strong yen have hit exports hard.
November shipments of automobiles plunged 31.9 per cent, while microchips and other electronics components fell 29.0 per cent.
US-bound exports fell 33.8 per cent, also the fastest pace on record, to 993.9 billion yen, while shipments to the European Union tumbled 30.8 per cent to 711.2 billion yen.
Exports to the rest of Asia fell 26.7 per cent to 2.58 trillion yen.
"The global economy has been worsening but deterioration in emerging countries in Asia, the Middle East and Russia is now conspicuous," Daiwa Institute's Watanabe said. "The worsening of the global economy is accelerating."
The Japanese economy was likely to pick up from late 2009 to early 2010 with exports recovering in tandem with the world economy, he said.
But the real effect of a strong yen on exports will come around that time, he said, noting that current trade is done at rates fixed in forward exchange contracts that were made when the yen was weaker.
"The Japanese economy may only show a dull recovery rather than a clear-cut upswing," he said.
The yen was trading at around 90 to the dollar on Monday, compared with above 110 yen a year earlier.
- AFP/yb
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