Japan’s trade balance plunged into a deficit of ¥725.32 billion in the year through March, the first red ink for a fiscal year in 28 years, hurt by earlier rises in commodity prices and slower exports to the United States and other economies, the Finance Ministry said Wednesday.
Exports dropped a record 16.4 percent in fiscal 2008 from the previous year to ¥71.14 trillion, the first decline in seven years, the ministry said in a preliminary report. Imports fell 4.1 percent to ¥71.87 trillion, also the first fall in seven years.
It was the first deficit for a business year since fiscal 1980, when Japan suffered from soaring crude oil prices after the second oil crisis. Analysts point to the difficulty the economy faces in attempting to export its way out of a recession.
The latest result came as sharp hikes in oil and other commodity prices in the first half of fiscal 2008 boosted the value of imports, while the global economic downturn in the second half increasingly hurt exports to such destinations as the United States, the European Union and China.
Exports shrank significantly in cars destined for the United States and Europe as well as in semiconductors and other electronics products exported to other parts of Asia.
Imports of coal and liquefied natural gas from the Asia-Pacific region in particular grew. Crude oil imports were down 0.4 percent during the year as average oil prices rose 18.8 percent to $92.60 per barrel.
“The Japanese people, lawmakers and government must take the results seriously,” Finance Minister Kaoru Yosano said, adding it is necessary to “check whether Japan-made products and services are losing their international competitive edge.”
Masamichi Adachi, senior economist at JPMorgan Securities Japan Co., said the data added to pressure on the government to address a “challenging” issue.
Adachi suggested the country’s export-dependent economy is no longer working. “It will be very important how (the government) works out measures to stimulate domestic demand” amid the recession, he said.
Japan’s trade surplus with the United States fell 43 percent, the sharpest fall on record, to ¥4.71 trillion, down for the second straight year.
Exports to the world’s largest economy declined a record 27.2 percent to ¥12.09 trillion. Imports from the United States fell 11.5 percent to ¥7.38 trillion.
Japan’s trade surplus with the European Union decreased for the first time in seven years, down 39.7 percent — also the steepest decline ever — to ¥2.96 trillion .
Exports to the 27-nation bloc fell 23 percent to ¥9.71 trillion and imports from the region tumbled 12.3 percent to ¥6.74 trillion .
Japan’s surplus with the rest of Asia fell 34.7 percent, the first loss in three years, to ¥6.05 trillion, with exports down 13.4 percent to ¥35.57 trillion and imports down 7.3 percent to ¥29.52 trillion.
With China, excluding Hong Kong and Macau, Japan’s trade deficit expanded 13 percent, the first increase in three years, to ¥2.19 trillion. Exports to China declined 9.8 percent to ¥11.76 trillion and imports were down 6.9 percent to ¥13.95 trillion.
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