Japan’s exports to the rest of Asia logged their first annual decline in nearly seven years in October as sales to the mainland fell, in a sign the global economic slump has spread to the world’s fastest-growing regions.
Economists warned the worst was yet to come, as overall exports logged their biggest fall since 2001 – the last time Japan suffered a recession.
“The real impact of the financial market turbulence since September on the trade data will show up in coming months,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Japan could continue to log a trade deficit for the rest of this year.”
Exports to other Asian countries slid because they too are suffering as recession spreads through the west, economists said.
The Bank of Japan begins on Thursday a two-day meeting at which it is expected to keep interest rates on hold, but debate is expected to focus on the widening damage from the global financial crisis that has heightened the prospects of another rate cut by the Federal Reserve.
Japan, the world’s second-largest economy, slipped into its first recession in seven years in the third quarter. The euro zone is also in recession, and the United States is expected to follow in the fourth quarter.
Big exporters have been a key driver of growth since Japan emerged from recession in 2002 after the dot.com bust, with mainland recently passing the United States as its biggest customer.
October figures showed overall Japanese exports fell 7.7 per cent from a year earlier and a 7.4 per cent rise in imports produced Japan’s second monthly trade deficit in three months.
Shipments to Asia had previously cushioned the impact from weakening US and European demand due to the financial crisis. But they fell 4 per cent in October from a year earlier – their first decline since 2002.
Exports to the mainland, Japan’s biggest trade partner, slipped 0.9 per cent to post the first decline in more than three years.
That pushed the trade balance to a deficit of US$668.5 million, the second monthly deficit in three months and lagging market expectations.
“We thought slowing imports would lead to a slight surplus in the trade balance but exports fell more than expected,” said Junko Nishioka, chief Japan economist at RBS. “It’s a very negative sign for Japan’s output and its economy.”
The Bank of Japan may consider more measures to soothe frazzled money markets at its policy meeting this week but is seen keeping rates steady until a shrinking economy or the global financial crisis demand a more drastic response. A rate decision will be announced on Friday.
The Bank of Japan cut its benchmark interest rate by 20 basis points to 0.3 per cent last month, joining global central bank efforts to contain the damage from the crisis.
1 comment:
Mainland’s Slump Hits Japan Hard
Reuters in Tokyo
20 November 2008
Japan’s exports to the rest of Asia logged their first annual decline in nearly seven years in October as sales to the mainland fell, in a sign the global economic slump has spread to the world’s fastest-growing regions.
Economists warned the worst was yet to come, as overall exports logged their biggest fall since 2001 – the last time Japan suffered a recession.
“The real impact of the financial market turbulence since September on the trade data will show up in coming months,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “Japan could continue to log a trade deficit for the rest of this year.”
Exports to other Asian countries slid because they too are suffering as recession spreads through the west, economists said.
The Bank of Japan begins on Thursday a two-day meeting at which it is expected to keep interest rates on hold, but debate is expected to focus on the widening damage from the global financial crisis that has heightened the prospects of another rate cut by the Federal Reserve.
Japan, the world’s second-largest economy, slipped into its first recession in seven years in the third quarter. The euro zone is also in recession, and the United States is expected to follow in the fourth quarter.
Big exporters have been a key driver of growth since Japan emerged from recession in 2002 after the dot.com bust, with mainland recently passing the United States as its biggest customer.
October figures showed overall Japanese exports fell 7.7 per cent from a year earlier and a 7.4 per cent rise in imports produced Japan’s second monthly trade deficit in three months.
Shipments to Asia had previously cushioned the impact from weakening US and European demand due to the financial crisis. But they fell 4 per cent in October from a year earlier – their first decline since 2002.
Exports to the mainland, Japan’s biggest trade partner, slipped 0.9 per cent to post the first decline in more than three years.
That pushed the trade balance to a deficit of US$668.5 million, the second monthly deficit in three months and lagging market expectations.
“We thought slowing imports would lead to a slight surplus in the trade balance but exports fell more than expected,” said Junko Nishioka, chief Japan economist at RBS. “It’s a very negative sign for Japan’s output and its economy.”
The Bank of Japan may consider more measures to soothe frazzled money markets at its policy meeting this week but is seen keeping rates steady until a shrinking economy or the global financial crisis demand a more drastic response. A rate decision will be announced on Friday.
The Bank of Japan cut its benchmark interest rate by 20 basis points to 0.3 per cent last month, joining global central bank efforts to contain the damage from the crisis.
Post a Comment