Japan’s exports fell for the first time in 16 months and its trade surplus plunged after a record earthquake and tsunami hit production, the Finance Ministry said yesterday.
The country may fall into a trade deficit in the near term amid rising oil and raw material prices, which inflated the value of March imports and ate into the trade balance, analysts said.
The latest data further illustrates the emerging impact of the March 11 disasters, in which a nine magnitude earthquake and the tsunami it unleashed devastated swathes of the northeast coast and triggered an atomic emergency.
Economists see Japan sliding into a temporary recession after the devastation to infrastructure and manufacturing facilities in the northeast, amid the nation’s worst crisis since World War II.
“If Japan posts a trade deficit in April and May, GDP is also likely to contract in the April-June period,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
Japan’s trade surplus in March stood at 196.5 billion yen ($2.37 billion), down 78.9 per cent but still managing to stay in the black for the second successive month, the finance ministry said.
Exports in March dropped 2.2 per cent to 5.87 trillion yen, falling for the first time in 16 months due to reduced shipments of automobiles, it said.
Expectations in a joint poll by Dow Jones and the Nikkei financial daily had been of a two per cent decline.
The fall was led by vehicle exports, which contracted 27.8 per cent, the ministry said, after Japan’s leading automakers were forced to halt production amid broken supply chains and power shortages.
The export fall is likely to continue, said Japan Foreign Trade Council chairman Shoei Utsuda.
“I cannot help but think the fall in April might be even sharper,” he told Japanese reporters, calling the rate of the drop in March “unprecedented”.
The yen came under pressure in Asia yesterday after the trade data, weakening to 82.90 against the dollar from 82.57 yen in New York late Tuesday.
“As the data showed a clear picture of sluggish exports, the market moved to dollar buying against the yen,” said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ. “The data revealed a steep decline in automobile exports. As the supply chain damaged by the quake has not been restored yet, it is seen to take time until automobile exports will recover.”
Many key component manufacturers are based in the worst-hit regions of Japan, their facilities damaged by the earthquake or inundated by the giant wave that followed. Shortages are expected to last for months.
The parts shortage has hit companies and production worldwide.
After stopping domestic production on March 11, Toyota Motor gradually reopened factories and is now operating at 50 per cent capacity as it struggles to secure necessary parts.
Toyota also suffered production disruptions in the United States, European Union and Australia, and said on Wednesday it will reduce auto production at its Chinese plants by 50-70 per cent until June 3.
Toyota president and chief executive officer Akio Toyoda said at the Shanghai auto show that “due to the situation in Japan, I hesitated to come to China right up until the last minute”.
March Japanese imports rose for the 15th straight month, increasing 11.9 per cent to 5.67 trillion yen, on surging prices of oil and iron ore, the ministry said.
The value of oil imports rose 14.8 per cent, while the value of iron ore imports soared 74.9 per cent and coal imports also rose 39.4 per cent.
Procurement of manufacturing parts from overseas also boosted imports, analysts said.
The disaster has depressed Japan’s business and consumer confidence, as Tokyo Electric Power Co, which operates the stricken Fukushima nuclear plant, makes slow progress to stop the world’s worst atomic disaster since the 1986 Chernobyl explosion.
The ministry said Japanese exports for the year to March rose 14.9 per cent to 67.8 trillion yen, while imports were up 15.9 per cent to 62.4 trillion, putting the annual trade surplus at 5.4 trillion yen, a 3.9 per cent rise.