There are signs Japan’s dramatic export collapse is easing. March exports fell 45.6%, down from February’s 49.4%, ending a five month period of accelerating falls.
It’s a sign of a ‘green shoot’ developing in the deeply recessed Japanese economy.
Economists had predicted exports would drop 46.4% in March.
But it’s marginal at best and no one should go around proclaiming the rebound is here.
But it is good news for Australia in that there’s no longer a sense of blind panic in our largest export market.
It won’t be recovering very quickly, but it looks as though the intense slump has eased.
Taken with the slowing pace of fall in China’s exports in March, and similar reports from South Korea and Taiwan, there’s every sign that the terrible drop in demand that prompted this dramatic fall of 10%-50% from late last year, has eased.
Like the US, there’s every sign that the intensity of the slump is easing: but we are now in a deep recession and could be there for months to come.
The slowing wasn’t enough to stop Japan from reporting a trade deficit for the first financial year in 28 years.
It was still bad though, with exports to China down 39.5%, Australia 54.9%, the US down 51.4% and Western Europe 51.8% (down 56% to the eurozone area).
A weaker yen (down around 6%) helped a touch, but car and electronic product shipments were again very weak.
The figures, from Japan’s Finance Ministry, showed a sharp fall in the overall trade balance, down 99% in the month.
For the Japanese 2008 fiscal year, which ended on March 31, exports were down 16.4% and imports were off 4.1%, giving the country a trade deficit of 725.3 billion yen ($A10.32 billion), its first shortfall for a fiscal year since 1980.
The 45.6% fall in imports was accompanied by a 36.7% drop in imports (Down just 7.2% for Australia for the month!).
That produced an 11.0 billion yen ($US111.5 million) trade surplus in March, down 99% from a year earlier but better than forecasts for a deficit of 5.0 billion yen.
Exports halved in February from a year earlier on plunging demand for Japanese automobiles and electronics in the US and Europe, with sales also seen slowing in emerging nations.
In one bright spot, exports to China fell only 31.5% in March from a year earlier, against a 39.7% decline in February and a 45.2% fall in January as the slump in shipments slowed.
The slowing pace of decline in shipments to China was taken as a sign that China’s huge stimulus package is starting to benefit Japanese exports.
With Japanese manufacturers planning to increase output in March and April, after a five-month drop, the slowing in the rate of fall of exports is now being looked at more favourably.
Japan’s economy will also get a boost from a record 15.4 trillion yen ($US156 billion) stimulus plan announced this month by Prime Minister Taro Aso.
The government claims the spending package will boost gross domestic product by 2% in the current fiscal year and create up to 500,000 jobs a year.
But at best that will help stabilise the uncertainty in the wider economy.
Major companies are still cutting jobs (Toshiba revealed cuts this week of 3,900 temporary workers after sacking 4,500 in January) and production is still being cut as well. Toshiba is also cutting investment and research, as are a host of other companies.
Tokyo media reports suggest that car giant Toyota may cut domestic production in the current business year to a 31-year low. Newspapers said the cut would equal a 30% reduction from production levels in 2007.
To pay for its latest stimulus package, Japan is to raise $US110 billion via new bond issues over the next year.
That will take the total bond raisings planned for this year to close to $US500 billion, a rise of 33% on 2008.
