Japan: Trade deficit worries grow

Japanese exports are tumbling, at their lowest point since the Asian financial crisis of 1986. In November, the trade balance showed a deficit of 223.4 billion yen (1.78 billion euros), compared to a surplus of 784.4 billion in November of 2007, in spite of the fact that imports have fallen for the first time in 14 months.

Experts observe that in November the country began to stop its rapid decline, but has not succeeded in reversing the trend. The prestigious economic newspaper Nikkei today published a survey of the directors of 137 leading companies in the country, 99.3% of whom say they expect the situation to get worse.

It is above all the automobile sector that is in crisis, with exports down by 31.9%, followed by microchips and other electronic components, at -29%. The crisis is not only affecting exports to the traditional partners the United States (-33.8% in November, the fifteenth month of decline) and the European Union (-30.8%), but also to Asia, with a decline of 26.7% (-24.5% to China, above all because of the lower demand for manufactured electronics products). Experts observe that the crisis has worsened rapidly because it has also struck the emerging economies of Asia, the Middle East, and Russia, which until a few months ago were almost unscathed.

The leading companies Toyota, Honda, and Sony have fired thousands of employees.

Japan is also paying the consequences of a stronger yen, which is today trading at 90 per dollar compared to 110 a year ago, which reduces profit from exports. The negative effects will be greater in the next few months, since the current trade agreements were reached when the yen was weaker. Takeo Fukui, the president of Honda, last week asked the government to stop the appreciation of the currency, threatening to move production abroad.

Toyota, the world's second-largest automobile company, announced that it expects to lose 150 billion yen (1.19 billion euros) in fiscal year 2008 (which ends in March of 2009), which would be its first loss in 71 years, due mainly to the collapse in sales.

Today, in its economic report for December, the government admitted that "economic conditions are worsening." The government has approved further aid, of 4.786 trillion yen (38 billion euros) for home and business owners, but more assistance is under consideration.

Today, in any case, prime minister Taro Aso, speaking to a group of businessmen, said that the country will be the first among the large economies to recover from the global recession, because it does not suffer from "structural problems" like unemployment, excessive production, and foreign debt. "Japan," he said, "has always risen like the phoenix."

Economist Hiroaki Muto is critical, contending that "there’s no grounds for what he’s saying."