Japan Exports Plunge

October 22nd, 2012
in econ_news, syndication

Econintersect:  Japan has suffered a catastrophic decline in exports in September 2012, down 10.3% breaking-news-130pxfrom weak numbers a year ago.  This was the fourth month in a row that exports had declined.  The decline was attributed to a slowdown in exports to Europe and the U.S. but the biggest factor was  in trade with China which has been negatively affected by the Chinese reaction to the purchase by the Japanese government of disputed islands (claimed by Japan, China and Taiwan).  The islands had been owned by a Japanese businessman.

Follow up:

The falling exports produced a trade deficit for Japan of $7.2 billion.  This was less than the trade deficit for August ($9.6 billion).  The trade deficit has also received a boost from increasing imports of fossil fuels after the Japanese government shut down most of the country's nuclear reactors following the meltdown at Fukushima Dai-ichi last year.

A negative balance of trade has been a problem for Japan ever since the March 2011 mega quake and tsunami devastated the northeast part of the country.  As can be seen in the following graph from Trading Economics, 2011 and 2012 have seen larger trade deficits that were experienced during the worst part of The Great Recession.  Note: The number just announced for September does not appear on the chart.

Click on graph for larger image.


The continuing accumulation of negative current account balances is feared may be enough to push the country back into recession.  The GDP year-over-year growth rate for the second quarter of 2012 was only 0.7%.  It will only take a nudge to make that negative in the thrid quarter.

John Lounsbury



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