Japan suffered its first trade deficit in nearly three decades in the year through March, but the steep decline in the Pacific nation’s exports is beginning to show signs of abating - an indication that global demand could be stabilizing.
Japan posted a trade deficit of 725.3 billion yen in fiscal 2008, its first full-year trade deficit since 1980. But after reaching 49.4% year-over-year in February, the decline in Japanese exports shrank to 45.6% in March. Exports rose 2.2% on a monthly basis, ending a four-month stretch of record declines.
The drop in exports to both the United States and China - Japan’s two largest markets - eased substantially in March. Exports to the United States fell 51.4% year-over-year in March, versus a 58.4% decline in February.
Traffic data from the California ports of Los Angeles and Long Beach - which together handle about 40% of U.S. container traffic - confirmed the bounce in trade, as it showed shipments increased on a month-to-month basis in February in March.
Meanwhile, Japanese exports to China slumped 31.5% in March, compared with a 39.7% decline the month prior.
“Exports have hit bottom,” said Richard Jerram, chief Japan economist at Macquarie Securities. “The stage is set for a strong rebound in industrial production and exports in the second quarter of 2009.”
Other analysts were less optimistic, however.
“It would be premature to celebrate,” David Cohen, director of Asian economic forecasting at Action Economics in Singapore, told Bloomberg. “There’s no denying the Japanese economy is in its most severe recession since WWII, but at least it’s not spiraling down any more.”
The Japanese economy contracted by 0.6% contraction in 2008, and the International Monetary Fund said yesterday (Wednesday) that it will likely shrink a record 6.2% this year.
The government is also expected to cut its economic outlook, despite plans to spend 15 trillion yen ($150 billion) on stimulus measures designed to boost gross domestic product by two percentage points this year.