Japan exports plunge record amount on weak demand

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(Agencies)
Updated: 2008-12-22 19:49

TOKYO -- Japanese exports plunged a record 26.7 percent in November, the Ministry of Finance said Monday, highlighting the drop in global consumer demand for automobiles, electronics parts and other Japanese products.

Automobiles for export park at a Yokohama port, south of Tokyo, Japan, Tuesday, April 1, 2008. Japanese exports plunged a record 26.7 percent in November. [Agencies]

Economists warned that exports, a mainstay of the world's second-largest economy, would tumble further with no recovery in sight for the global economy.

"Demand is rapidly cooling not only in the United States and Europe but also in Russia and the Middle East, and we are expecting a further plunge in exports as the global economy is deteriorating," said Hideki Matsumura, a senior economist at the Japan Research Institute in Tokyo.

Battered by plunging global demand and a strengthening yen, major exporters like Toyota Motor Corp. and Sony Corp. have scaled back production, jobs and earnings projections.

Toyota on Monday said it would barely break even this fiscal year through March, slashing its profit forecast to 50 billion yen ($555 million), a fraction of the 1.7 trillion yen it earned the previous year.

"The change that has hit the world economy is of a critical scale that comes once in a hundred years," President Katsuaki Watanabe said at the company's Nagoya office. The drop in vehicle sales over the last month was "far faster, wider and deeper than expected."

Indeed, exports suffered their biggest year-on-year drop since the current system of statistics went into effect in 1980. Exports totaled 5.3 trillion yen ($60 billion), while imports fell 14.4 percent from a year earlier to 5.55 trillion yen ($62 billion), the ministry said.

That resulted in a trade deficit of 223.4 billion yen ($2.5 billion), the fourth time this year Japan said its imports exceeded exports after January, August and October.

For years, Japan was blasted by its trading partners over its trade surpluses. But now, the global economic slump is turning Japan into a net importer, at least in recent months.

"The plunge in exports in November clearly reflected a severe global downturn," said ministry official Yu Oki. "Demand for Japanese goods, especially cars and electronics products, is falling sharply everywhere."

The latest figures, however, do not necessarily signal a fundamental structural shift of Japan's export-driven economy. With a quickly shrinking population, many Japanese companies have nowhere to look but abroad for future growth and have planned accordingly.

Exports to the United States, the world's largest economy, plummeted by a record 33.8 percent in November, marking the 15th consecutive year-on-year fall.

Among US-bound shipments, vehicle exports plummeted by 44 percent in the month, while exports of auto parts fell 40 percent and those of audio equipment was down by 48.2 percent.

Japan's exports to the European Union tumbled by 30.8 percent, with vehicle shipments to the region falling by 37.2 percent, the ministry said.

Asia-bound exports fell 26.7 percent as semiconductor shipments dropped by 30.2 percent. Japan's exports to China alone plunged by 24.5 percent.

Exports are also shrinking as the yen appreciates against most major currencies. That means overseas sales in dollars and euros translates into fewer yen.

The ministry said the yen traded to 97.97 to the dollar on average in November, up 16 percent from the same month last year.

The yen continued to climb against the dollar in December, hitting a 13-year high as investors dumped the greenback on US economic worries. The Japanese currency was quoted at 90.02 to the dollar in Tokyo Monday afternoon.