Japan fell into a trade deficit in April as exports tumbled at the fastest pace in 18 months on supply chain disruptions after the March 11 earthquake and tsunami, official data showed yesterday.
It is the first time in 31 years that the world’s third largest economy has suffered a trade deficit for the month of April, according to the finance ministry.
Japan logged a deficit of 463.7 billion yen (€3.97 billion) last month, reversing a year-before surplus of 729.2 billion yen.
Exports fell 12.5 per cent, the fastest pace of decline since October 2009, with shipments of cars diving 67 per cent and electronics parts such as microchips dropping 19 per cent.
Japanese factory production plunged by a record 15.3 per cent in March from February due to the impact of the earthquake, tsunami and a subsequent nuclear crisis, considered the worst since Chernobyl in 1986.
The tsunami halted many nuclear reactors and crippled an atomic power plant on the northeast coast, causing electricity shortages and sparking demand for fuel to be used in thermal power generation. Exports to China, the biggest market for Japanese products, decreased 6.8 per cent to log the first year-on-year fall in 18 months as shipments of cars and car parts plunged.
The overall deficit, however, was smaller than the market average forecast of 700 billion yen as imports marked a slower-than-expected rise.
Japan last ran a trade deficit in January when the sum reached 479.4 billion yen due to rising commodity prices and weak demand from China ahead of China’s Lunar New Year holiday.
Overall imports in April rose 8.9 per cent to post growth for the 16th consecutive month as purchases of petroleum products shot up 62.2 per cent on higher prices and demand.
Economists agreed Japan would return to trade surplus later this year but were divided on whether the deficit would expand in the coming months.
Hiroshi Watanabe, economist at Daiwa Institute of Research, said Japan’s “deficit could widen until after summer as imports are likely to keep expanding”.
Exports may have hit bottom in April or may hit in May while imports are continuing to grow steadily, he said.
“Imports in April did not grow as much as expected but they will continue to rise (in the coming months) on higher demand for fuel due to the electricity shortage,” he said.
Imports of general-use parts for electronics and cars are also likely to increase due to constraints on production in Japan, Watanabe said.
“April was the worst for Japan’s trade and I don’t think deficits will worsen in the months ahead,” said Norio Miyagawa, a senior economist at Mizuho Research and Consulting.
“We may see several more red figures but they will be much smaller than April’s,” he told Dow Jones Newswires.
The “recent casual surveys suggest a somewhat quick recovery in Japanese exports is likely”, he added.
Japan’s government maintained its downbeat assessment of the economy as it released a monthly report Tuesday.
The Japanese economy “has shown weakness recently” due to the disaster, the Cabinet Office said, forecasting the weakness would continue for some time.