Japan logged its biggest fiscal half-year trade deficit ever on Monday as the sovereign debt crisis in Europe and strained relations with China put the brakes on exports, government data said.
For the first half of fiscal 2012 through September, Japan logged a ¥3.219 trillion deficit in goods trade, up 90.1 percent from a year earlier and the highest since comparable data started being kept in fiscal 1979.
In September alone, the deficit stood at ¥558.6 billion, the third straight month of red ink and the largest for that month, the Finance Ministry said in a preliminary report, underscoring fears that violent anti-Japan rallies and boycotts of Japanese products in China have weighed on exports to the nation’s biggest trading partner.
The results add to the assessment that slower exports, also affected by the stronger yen in the currency market, and weakening production have increasingly strained Japan’s economic recovery from the March 2011 earthquake and tsunami, with the government forced to draw up stimulus steps to underpin growth and the Bank of Japan to further ease monetary conditions.
Exports in the first half decelerated 2.0 percent from the same period of fiscal 2011 to ¥32.16 trillion on declines in semiconductors and other electronics parts to Europe, particularly Germany, after the eurozone crisis deteriorated consumer and business sentiment in the area.
Imports grew 2.6 percent to ¥35.379 trillion on increases in mineral fuels, including liquefied natural gas and crude oil from the Middle East, as domestic utilities boosted thermal power generation to cover the loss of nearly all atomic power due to reactor shutdowns in light of the Fukushima nuclear crisis.
The figures are measured on a customs-cleared basis.
Exports to China fell 8.2 percent to ¥5.921 trillion in the first half and slid 14.1 percent to ¥953.8 billion in September, sharper than the 9.9 percent loss in August. It was the fourth consecutive month of decline as various products, ranging from autos and auto parts to steel and semiconductors, declined significantly.
The balance showed Japan logged its biggest September deficit with China — ¥329.5 billion — as imports rose 3.8 percent to ¥1.283 trillion.
Resentment in China has accelerated since the government last month nationalized the Senkakus in the East China Sea. The uninhabited islets are also claimed by Beijing and Taiwan.
“It is possible that the deteriorating Japan-China relations have adversely affected (Japanese) exports. We need to closely watch any future development,” Mitsumaru Kumagai, chief economist at Daiwa Institute of Research, said in his report, underscoring a sharp drop in auto exports to China.
The Chinese economy has been slowing amid the global downturn in line with the crisis in Europe. This has already cooled growth in exports to China, Kumagai added.
With the European Union, Japanese exports fell 16.1 percent to ¥3.205 trillion during the first half of fiscal 2012, while imports from the 27-member bloc gained 0.9 percent to ¥3.297 trillion, with the balance coming to a deficit of ¥92.1 billion, the first red ink on a fiscal half-year basis.
Shipments of vehicles to Britain and electronic parts to Germany were the main sufferers from the economic weakness in Europe, where fiscal problems in some eurozone states have strained a banking sector already exposed to the sovereign debt market in the region.
The impact of the crisis has been also felt outside the area, particularly through trade channels. Like China, other developing economies in Asia have also observed a downturn, in turn capping the expansion in Japan’s exports to its neighbors.
Exports to Asia as a whole, including China, dropped 4.7 percent to ¥17.743 trillion, led by slumps in vehicles destined for Thailand and steel products for China and South Korea, the ministry said. The balance came to a ¥2.211 trillion surplus, down 32.3 percent.
In contrast, exports to the United States rose 16.6 percent to 5.594 trillion on continued advances in shipments of cars and auto parts as well as construction and mining machinery.