By Keiko Ujikane
Jan. 13 (Bloomberg) -- Japan’s current-account surplus narrowed for a ninth month in November as exports slumped by a record in the wake of the global recession.
The surplus shrank 65.9 percent to 581.2 billion yen ($65 billion) from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 24 economists surveyed by Bloomberg News was for the gap to narrow to 600 billion yen.
Japan’s recession is deepening as the worldwide financial crisis chokes off demand for the nation’s cars and electronics, prompting companies to cut production and investment. Toyota Motor Corp., which is forecasting its first operating loss in seven decades, said last week that it will suspend manufacturing at a dozen domestic factories for 11 days in February and March.
“There’s no doubt that Japan’s recession is deepening,” said Susumu Kato, chief economist at Calyon Securities in Tokyo. “Demand for automobiles and semiconductors is declining considerably amid the global economic turmoil.”
Exports fell 26.5 percent in November from a year earlier, the most since comparable data were first made available in 1985, today’s report showed. Imports slid 13.7 percent.
The yen’s 22 percent gain against the dollar in the past year is compounding exporters’ woes and eroding the value of investments Japanese have overseas. Japan’s currency traded at 89.49 per dollar as of 10:38 a.m. in Tokyo and surged to a 13- year high of 87.14 on Dec. 17.
Every 1 yen gain against the dollar and euro trims Toyota’s annual operating profit by 40 billion yen and 6 billion yen, according to the company.
Record Plunge
Exports plunged a record 26.7 percent in November from a year earlier on a customs-cleared basis, the Finance Ministry said last month.
Crude oil traded at $58 a barrel in November on average, 61 percent less than the record $147.27 reached on July 11. Japan gets virtually all of its oil from abroad.
“Japan’s economic downturn may be considerably deep,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “Exports will probably drop further in the coming months, worsening corporate profits and investment.”
Mounting evidence of a weakening economy last month prompted the Bank of Japan to cut interest rates to 0.1 percent, increase purchases of government debt and announce plans to buy commercial paper to ease companies’ borrowing costs.
The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, narrowed 15.5 percent to 844.7 billion yen from a year earlier.
The current account tracks the flow of goods, services and investment income between Japan and its trading partners. It includes trade not shown in the customs-cleared balance.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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