Yesterday’s export figures for Japan paint a miserable story for our biggest export market: a record plunge of 49.4% in February, exceeding the 46.2% plunge in January and market forecasts for a 47% slide.
Cars, electronics, consumer products, chemicals, high end manufacturing equipment, trucks, and motorbikes: all down and slumping in the worst monthly performance since Japan started compiling trade figures in their current form in 1980.
The decline in exports was the steepest since 1957 and worse than most economists had anticipated.
With China, the US, Europe and other parts of Asia are all in recession, entering a slump, or seeing the slowdown accelerate, it’s no wonder Japan is finding it tough to sell things overseas; the surprise is how it has been intensifying as the rate of decline in exports increases.
Imports fell faster than expected, down 43%, and helping Japan record its first trade surplus in five months.
The Finance Ministry said in Tokyo that the country had a trade surplus of 82.35 billion yen ($US840 million US dollars) for the month, which was down 91.2% from a year earlier, but better than January’s record deficit of more than $US10 billion. The surplus came from a slide in the value of imports (with lower oil volumes and prices helping) (Source) .
Japanese exports to Australia fell 58% in February as car shipments plunged, and imports from Australia only dipped by 7.6% because of the higher prices for iron ore and coking and thermal coal.
The WTO estimates that volume of developed country exports will fall 10% this year while trade-dependent developing countries will see export volumes shrink 2-3%. Trade will sink by 9% across the globe.
Japan is certainly doing more than its bit to make sure that forecast is met, unfortunately for major supplier countries like Australia.
The impact on Australia won’t be seen until April’s figures are released in late May, and then May’s figures in late June when new, sharply lower contract prices for coal and iron ore shipments kick in.
Overall exports of cars from Japan plunged 65% from February 2008, while shipments of semiconductor parts and devices slid 51%. Steel was down more than 46%, paper exports were off 33%, and computers and parts were down a similar amount.
Exports to the US, Japan’s biggest market, dropped a stunning 58.4%, and Europe an equally amazing 54.7%. Shipments to Asia fell 46.3% and to China by 39.7%, which was relatively better than elsewhere in comparison.
The poor trade figures for January and February, plus expectations of another sharp fall in industrial output, on top of the 10%-plus plunge in January, looks certain to see the country’s economic growth decline by more than the 12.1% annual figure it did in the December quarter.
Japanese companies from Toyota to Sony, Hitachi, NEC, and a string of other global giants and household names are expecting to report huge losses for the financial year that ends in Japan next Tuesday March 31.
Toyota said yesterday that its overseas shipments of cars and parts fell a whopping 69% in February from the same month of 2008.
Bloomberg points out that the collapse of Japanese exports comes at a time when exports are running at their highest share of economic growth for decades.
During Japan’s expansion of 2002 to 2007, exports as a portion of GDP rose to 15.6% from 10.4%, Bloomberg reported.
That has left Japan especially vulnerable to a global slump, which is still happening.
There are continuing hints of a stabilising in the US economy, but these won’t be confirmed for another couple of months.
The only bright spot for the Japanese is the reversal of the very strong yen: it’s now down 8% against the US dollar after being higher for the first six weeks.
But if investors start selling the US dollar off as worries grow about things like the Fed’s quantitative easing policy, or the latest bank bail out fund, the relief will prove temporary.
