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Source: www.asiaecon.org |


Japan's exports plunged a record 49.4 percent in February as deepening recessions in its two main export markets, the United States and Europe, decreased demand for the country's main exports – cars and electronics.

Japan’s exports plunged a record 49.4 percent in February as deepening recessions in its two main export markets, the United States and Europe, decreased demand for the country’s main exports – cars and electronics. This was its sharpest decline since the Japanese government started recording comparable data. The actual export figures were worse than what economists forecast, which was a 47.6 percent decline.

The most recent dismal export figures come after the country recorded a 45.7 percent drop in exports in January. The January figures were also attributed to weakened demand for the country’s export products.

The sharp drop in exports reflects the fact that Japan’s gross domestic product might shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the fourth quarter of 2008, the sharpest contraction since 1974 .

“There’s still a lot of weakness out there; that’s going to be a big drag on production and most people are looking for the first-quarter GDP to be as bad as the previous quarter,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “Japan is as dependent on exports as anybody.”

Demand for Japanese exports fell across all regions. Japan’s Finance Ministry reported that exports to the U.S., the country’s biggest export market, declined a record 58.4 percent from a year earlier.  Exports to Europe declined by a record 54.7 percent. Shipments to Asia slumped 46.3 percent. Goods sent to China declined 39.7 percent.

“Japanese growth was exclusively dependent on exports,” said Professor Noriko Hama at Doshisha Business School in Kyoto. “It was natural that Japan would be hit a lot more severely than other countries.”

Despite plunging exports, Japan was able to post its first trade surplus in five months. A sharp fall in imports was able to offset the decline in exports. Japanese imports fell a record 43 percent, putting the country’s trade surplus at 82.4 billion yen ($842 million) in February. This figure, however, was still 91.2 percent lower than the same month a year earlier.

As Japan heads towards its worst recession since 1945, there are discussions of the government implementing a new stimulus package. Finance Minister Kaoru Yosanu said that the new stimulus package could be worth as much 20 trillion yen ($205.56 billion), double the amount pledged since October. The increased government spending would add to the country’s ballooning public debt, already estimated at 170 percent of its gross domestic product.

Japan, Asia’s largest economy, fared worse in February than its neighbors. Exports from South Korea fell 17.1 percent, about half the January figures. Exports from Taiwan declined 28.6 percent after dropping a record 44.1 percent in January.

“The fact that these other countries are doing a little better might give Japan some encouragement that world demand is bottoming out,” said Action Economics’ Cohen. “It should only be a matter of time before Japan shows the same stabilization.”

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |

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