Wednesday, November 21, 2012

Japan’s exports sink to 3-year low as recession looms


JAPAN is suffering its worst year for exports since the global contraction in 2009 as Europe’s crisis, China’s slowdown and a diplomatic dispute with the Chinese hurt the nation’s manufacturers and deepen the risk of a recession.
Shipments totaled ¥53.5 trillion ($653 billion) for January through October, down 2.3 percent from the same period in 2011, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo on Wednesday. The trade deficit for 2012 so far is a record ¥5.3 trillion.
The so-called hollowing out of Japan’s export champions, highlighted by a cut in Panasonic Corp.’s debt rating to one step above junk status by Moody’s Investors Service on Tuesday, underscores the urgency of kindling domestic demand.
Japan’s political parties are facing off ahead of an election next month on how hard to press the central bank to boost stimulus.
“There’s no doubt that Japan’s economy is already in a recession,” said Kiichi Murashima, chief economist at Citigroup Inc. in Tokyo. “Political pressure for further monetary easing is building, and we expect the BOJ [Bank of Japan] to take additional measures in January.”
The yen slid to a seven-month low after the trade data were released, falling to 81.92 as of 11:10 a.m. in Tokyo, from 81.67 before the report. The Nikkei 225 Stock Average was up 1.1 percent, heading for its fifth gain in six days amid speculation that the opposition Liberal Democratic Party, led by Shinzo Abe, will form the next government and push the BOJ into increased stimulus that weakens the yen.
Exports in October fell for a fifth month, down 6.5 percent from a year earlier and leaving a trade deficit of ¥549 billion, the Finance Ministry said. That compared with the median forecast of 25 economists for a 4.9- percent decline.
Shipments to China, Japan’s largest export market, fell 11.6 percent as a territorial spat over islands in the East China Sea takes its toll on the $340-billion trade relationship between Asia’s two biggest economies. Exports to the European Union fell 20.1 percent on year, while those to the US were up 3.1 percent.
“The slump in exports will probably continue this quarter,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “China’s economy probably hit a bottom in the July-September period, but its recovery may be limited this quarter and there’s no sign that Chinese consumers will stop boycotting Japanese cars.”
Japan’s exports for the first 10 months of this year are the lowest for the same period since 2009, even including 2011—when the earthquake in March and flooding in Thailand crimped production at Japanese manufacturers. While the yen is at a seven-month low, it is still more than 30 percent higher than five years ago, hurting exporters’ profits.
Japan will probably slide into recession this quarter on weakness in domestic consumption and the decline in exports, which account for about 15 percent of the economy. Gross domestic product shrank an annualized 3.5 percent last quarter, and the economy may contract a further 0.4 percent in the final three months of this year, the third technical recession since 2008, according to a Bloomberg News survey of economists.
Japanese recessions are officially defined by a government-charged panel that considers data beyond figures for gross domestic product.
Bank of Japan Governor Masaaki Shirakawa on Tuesday pushed back against pressure on the central bank, criticizing the unlimited easing advocated by Abe and urging respect for the BOJ’s independence. The central bank held off from monetary easing after expanding asset purchases in September and October, switching the focus to a December meeting where more measures are forecast

In Photo: Containers are stacked at a shipping terminal in Tokyo, Japan. Japanese shipments abroad fell for a fifth month. (Bloomberg)

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