Finance Ministry figures recently released in Tokyo have shown that 2012 has been Japan’s worst year for exports for three years.
A combination of factors – including the ongoing territorial dispute with China and the Eurozone crisis – have led to Japan posting the worst export figures since the global economic slowdown kicked off in 2009 and are pushing the world’s third largest economy ever closer to recession.
The latest figures showed that exports tumbled for a fifth month in October, dropping by 6.5 per cent from the same period in 2011 and accruing a trade deficit of 549 billion Yen. Economists participating in a Bloomberg survey only forecast a 4.9 per cent decline.
Shipments were also down by 2.3 per cent on the previous year, totalling 53.5 trillion Yen from January through to October.
A key contributing factor to the drop in shipments was the territorial dispute between Japan and neighbouring China and the consequent damage sustained to the trade relationship between them. The Finance Ministry’s statistics showed an 11.6 per cent fall in shipments to China and a 20.1 per cent decline in exports to the European Union on the year.
So far in 2012 Japan’s trade deficit stands at a record 5.3 trillion Yen.
According to Kiichi Murashima, chief economist with Citigroup Inc, ‘There’s no doubt that Japan’s economy is already in a recession. Political pressure for further monetary easing is building, and we expect the Bank of Japan to take additional measures in January.’
Meanwhile another economist, Yuichi Kodama, asserted: ‘The slump in exports will probably continue this quarter. China’s economy probably hit a bottom in the July-September period, but its recovery may be limited this quarter and there’s no sign that Chinese consumers will stop boycotting Japanese cars.’
When this drop in exports is viewed in conjunction with Japan’s weakening domestic consumption it seems all but certain that Japan will enter recession this quarter.
Economists are currently predicting that Japan’s economy will contract by 0.4 per cent in the forth quarter of this year.
As of 10:13 am
The Pound to Euro exchange rate is currently trading at 1.2450
The Pound to US Dollar exchange rate is currently trading at 1.5913
The Pound to Australian Dollar exchange rate is currently trading at 1.5350
The Euro to US Dollar exchange rate is currently trading at 1.2780
The Euro to Pound exchange rate is currently trading at 0.8031
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