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Japan’s Exports Collapse In January

Japan’s exports plunged by 45.7 percent year on year in January, producing a record trade deficit, as recessions in the U.S. and Europe, and a sharp downturn in China crushed demand for the country’s machinery, cars and electronics. A drop of this size is truly staggering.


“People are coming to realize that Japan is in deep trouble,” said Hiroshi Shiraishi, an economist at BNP Paribas Securities Japan Ltd. in Tokyo. “Considering what’s happening on the export side, and the implications that has for the domestic economy, the yen is clearly not a buy.”

Japan’s trade balance was sent deep into red territory driven, of course, by the 45.7% fall in overall exports to 3.48 trillion yen. As can be seen in the chart below, the yen value of Japanese exports has simply collapsed in recent months.


“The economy already seems to be falling apart,” said Masahiro Eguchi, who manages economic research at Shoko Chukin. Companies are likely to cut production more steeply, he said, and even if they continue to reduce output at the current pace, “many small companies won’t be able to survive.”

Imports, at 4.44 trillion yen, were down 31.7 percent from a year earlier.The declines in both importas and exports widened the trade deficit to 952.6 billion yen ($9.9 billion), the biggest since 1980, the earliest year for which comparable data is available. The drop in export shipments abroad eclipsed the previous record of 35 percent decline set only last month.


Exports to the U.S. fell an unprecedented 52.9 percent from a year earlier, and shipments to Asia and Europe also clocked in their largest-ever declines as the global recession deepened. Shipments to Europe slid 47.4 percent in January from a year earlier, while exports to China fell 45.1 percent and those to Asia dropped 46.7 percent.


Even emerging economy sales in countries like India, Brazil, Vietnam and Russia, which had buoyed up the numbers in the middle of 2008 have fallen rapidly. Exports to India were down by 34.9% year on year, Brazil exports fell 38%, Vietnam 48.4% and Russia 65.5%.

Japan’s economy shrank at an annualised rate of 12.7 percent pace in the last quarter, the most since the 1974 oil shock, and it is clear that the worst is yet to come. The consensus forecast at this point is that Japan’s economy may shrink by a record 4 percent in the year starting April 1, but even this may now be optimistic. The worst contraction Japan has seen to date was in fiscal 1998, when the economy contracted by 1.5 percent.

And while talk from the Bank of Japan of possible share purchases saw Japanese stocks rebound from quarter-century lows and the yen was trading at its weakest level since last November the Japanese government has still been unable to pass the stimulus package that could help encourage domestic spending in the absence of export demand. Prime Minister Taro Aso is struggling to get approval from the opposition-controlled upper house to spend 10 trillion yen to aid companies and households. But while the politicians dither, Tokyo burns, or almost.

Originally published at the Global Economy Matters blog and reproduced here with the author’s permission.

133 Responses to “Japan’s Exports Collapse In January”

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Don’t talk about Japan’s economy. It has no economy. It is, and always has been, simply a morphing Ponzi scheme. Let them starve–they’re scum.John Ryskamp

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