Japan’s trade balance fell into the red in April with a deficit of ¥463.7 billion, a big shift from the ¥189.4 billion surplus the month before, as the March 11 earthquake and tsunami wreaked havoc on exporters’ production plants in the northeast, the Finance Ministry said Wednesday.
It was the first April since 1980 to show a trade deficit, the ministry said.
It was also the first deficit since January, when exports tend to be lower than other months due to the New Year’s holidays.
The quake snapped supply chains in the auto and electronics industry, where the lack of crucial components hampered their efforts to restore production nationwide. The unstable power supply also hit many manufacturers, economists said.
Exports in April dropped 12.5 percent to ¥5.2 trillion, while imports jumped 8.9 percent to ¥5.6 trillion.
Exports of cars plunged 67 percent from a year earlier, worsening from the previous month and becoming a major factor in the overall deficit.
Adjusted for seasonal factors, April’s trade deficit stood at ¥496.4 billion. It was the first seasonally adjusted deficit since March 2009, when the global financial crisis hit exports.
In a regional breakdown, Japan ran a surplus with the United States, but it dropped 56.5 percent to ¥163.8 billion, down for the first time in five months. The deficit with China increased for the second month in a row to ¥108.3 billion.
Economists say it is possible the trade balance for all of 2011 will mark a deficit for the first time since 1980, as exports of automakers and other manufacturers won’t soon fully recover to the predisaster level.
“Domestic production is not going to come back easily,” said Taro Saito, a senior economist at NLI Research Institute, adding that the worst period for exports will be April and May.
“Even if the production capacity at factories returns to the normal level, the next problem is that some of their customers may have already switched to other suppliers,” he said.
Toyota Motor Corp. said its damaged domestic production lines will rebound to 70 percent of capacity by June but won’t fully recover until November or December.
Nissan Motor Co. doesn’t expect its lost production performance to recover until October.
The value of Japan’s imports was boosted by rising global oil prices.
The trade balance is unlikely to see any marked improvement soon because imports are expected to keep rising toward the end of the year thanks to strong demand for construction materials in the disaster area as well as liquefied natural gas to fuel thermal power plants, needed to offset the loss of electricity caused by shutdowns of nuclear reactors.
Yukio Noguchi, an adviser to the Institute of Financial Studies at Waseda University, said the sharp drop in exports in April and the expected slow recovery indicates the country’s economic structure has reached a turning point.
Exporters are already hit by the strong yen and will suffer under the expected rise in electricity costs, he added.
“The country can’t just sell goods to earn a trade surplus anymore,” Noguchi said. He said Japan urgently needs to stop counting on export-driven growth and instead find other sources of economic expansion.
Noguchi expects the trade deficit to grow for at least another year.
Exports are unlikely to recover sharply because the collapse of some plants making crucial parts in the disaster-hit areas will prompt automakers and other producers to shift production overseas, he said.
Earlier this month, Toyota Executive Vice President Satoshi Ozawa told a news conference that the recent sharp rise in the yen is hampering the company’s efforts to maintain domestic production and employment, indicating the possibility Toyota will move more production overseas.