Japan hit by 1st trade deficit in 28 years

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TOKYO, April 22 Kyodo -
Japan's trade balance plunged into a deficit of 725.32 billion yen in the year
through March, the first red ink for a fiscal year in 28 years, hurt by earlier
rises in commodity prices and slower exports to the United States and other
economies, the Finance Ministry said Wednesday.
Exports dropped a record 16.4 percent in fiscal 2008 from the previous year to
71.14 trillion yen, the first decline in seven years, the ministry said in a
preliminary report. Imports fell 4.1 percent to 71.87 trillion yen, also the
first fall in seven years.
It was the first deficit for a business year since fiscal 1980, when Japan
suffered from soaring crude oil prices after the second oil shock. Analysts
point to the difficulty the Japanese economy faces in attempting to export its
way out of a recession.
The latest result came as sharp hikes in oil and other commodity prices in the
first half of fiscal 2008 boosted the value of Japanese imports, while the
global economic downturn in the second half increasingly hurt exports to such
destinations as the United States, the European Union and China.
Exports shrank significantly in cars destined for the United States and Europe
as well as in semiconductors and other electronic products exported to other
Asian countries.
Imports grew particularly in coal products and liquefied natural gas from the
Asia-Pacific region. Crude oil imports were down 0.4 percent during the year as
average oil prices rose 18.8 percent to $92.6 per barrel.
''The Japanese people, lawmakers and government must accept the results
seriously,'' Finance Minister Kaoru Yosano said, adding it is necessary to
''check whether Japan-made products and services are losing their international
competitive edge.''
Masamichi Adachi, senior economist at JPMorgan Securities Japan Co., said the
data added to pressure on the government to address a ''challenging'' issue.
Adachi suggested the country's export-dependent economy is no longer working.
''It will be very important how (the government) works out measures to
stimulate domestic demand'' amid the current recession, he said.
Japan's trade surplus with the United States fell 43 percent, the sharpest fall
on record, to 4.71 trillion yen, down for the second straight year.
Exports to the world's largest economy declined a record 27.2 percent to 12.09
trillion yen. Imports from the United States fell 11.5 percent to 7.38 trillion
yen.
Japan's trade surplus with the European Union decreased for the first time in
seven years, down 39.7 percent -- also the steepest decline ever -- to 2.96
trillion yen.
Exports to the 27-nation bloc fell 23 percent to 9.71 trillion yen and imports
from the region tumbled 12.3 percent to 6.74 trillion yen.
Japan's surplus with the rest of Asia fell 34.7 percent, the first loss in
three years, to 6.05 trillion yen, with exports down 13.4 percent to 35.57
trillion yen and imports down 7.3 percent to 29.52 trillion yen.
With China, excluding Hong Kong and Macao, Japan's trade deficit expanded 13
percent, the first increase in three years, to 2.19 trillion yen. Exports to
China declined 9.8 percent to 11.76 trillion yen and imports were down 6.9
percent to 13.95 trillion yen.
In March alone, the overall trade balance recorded a surplus for the second
straight month. But the surplus plunged 99 percent from a year before to 10.96
billion yen.
Exports decreased 45.6 percent last month to 4.18 trillion yen and imports lost
36.7 percent to 4.17 trillion yen.
The trade figures are measured on a customs-cleared basis before adjustment for
seasonal factors.
==Kyodo