Japanese exports have almost halved from a year ago, a record plunge that puts the world's number two economy on course for its worst recession since World War II, data showed on March 25. Exports plunged 49.4% last month from a year earlier, surpassing January's slump of 45.7%.
Shipments to the U.S. and Europe more than halved while demand from the once-booming Chinese economy dropped almost 40%.
The Japanese economy logged its worst performance in almost 35 years in the last quarter of 2008, shrinking at an annualized pace of 12.1%. Analysts said this quarter was likely to be even worse. UBS economist Akira Maekawa expects a 15.1% contraction, which would be the worst in the post-war era.
Japan's trade surplus dived 91.2% last month from a year earlier to 82.35 billion yen (US$840) as imports slid 43%.
It was the first surplus in five months, but analysts warned against optimism. "The steep drops in both exports and imports offer evidence of the global economic contraction," said Barclays Capital's chief Japan economist, Kyohei Morita.
The corporate sector was a key driver of Japan's economic recovery following the 1990s recession, as companies enjoyed strong profits and invested heavily to expand their production facilities. Now corporate giants such as Toyota and Sony are slashing thousands of jobs as they fall deep into the red.
The Japanese economy is also bracing for another bout of deflation. The government may report on March 27 the first year-on-year decline in core consumer prices since September 2007, analysts said. But Japan is not yet slipping into another deflationary spiral, central bank governor Masaaki Shirakawa said. The economy is facing a further downturn "and prices will likely soon start falling. But right now, the country is not going through a vicious cycle where economic contraction and price falls reinforce each other," he said.
Prime Minister Taro Aso announced this month plans for a third stimulus to revive Asia's largest economy, while the central bank has cut interest rates to almost zero and taken additional steps to tackle a credit squeeze. But analysts said the Japanese economy will not be able to recovery until demand picks up in the U.S. and China. "As the U.S. is expected to be the first one out of the crisis, other economies will recover six months later, including Japan," Muramatsu said.
Copyright Agence France-Presse, 2009
