Japan Posts First Current-Account Deficit Since 1996

By Keiko Ujikane

March 9 (Bloomberg) -- Japan posted its first current- account deficit in 13 years in January after exports collapsed amid the global recession.

The deficit stood at 172.8 billion yen ($1.76 billion), the Ministry of Finance said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a gap of 15.3 billion yen.

Companies from Toyota Motor Corp. to Sharp Corp. are cutting output and firing workers as overseas shipments slump at an unprecedented pace, pushing the economy toward its worst postwar recession. Lending growth by Japanese banks slowed for a second month in February as the economic outlook deteriorated.

“Other countries are in recession while Japan is in a depression,” said Chua Soon Hock, managing director of Asia Genesis Asset Management Pte, a Singapore-based hedge fund. “Japan is like an old man who developed pneumonia while other younger countries caught the flu.”

The yen traded at 98.27 per dollar at 10:30 a.m. in Tokyo from 97.96 before the report was published. The currency’s 23 percent gain against the dollar in 2008 eroded the value of exporters’ overseas sales, exacerbating losses at companies including Toyota and Sharp.

The global economy is likely to shrink for the first time since 1945 this year, the World Bank said today, forecasting that trade will drop by the most in 80 years.

January 1985

The deficit was the biggest since January 1985, the earliest year for which there is comparable data.

The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, narrowed 31.5 percent to 992.4 billion yen from a year earlier, the biggest drop since March 1994.

Bank of Japan Governor Masaaki Shirakawa said last week the economy is worsening faster than the central bank expected and the policy board is looking for ways to counter the slump.

Japan’s parliament last week approved 5 trillion yen in stimulus spending after months of wrangling over the details, during which Prime Minister Taro Aso’s approval rating popularity dropped to about 10 percent.

Exports tumbled 46.3 percent in January from a year earlier, today’s report showed, after declining 35.1 percent in December. Imports slid 31.7 percent in January, compared with a 21.2 percent decline the previous month.

Shipments to the U.S. tumbled an unprecedented 52.9 percent in January from a year earlier, and exports to Asia and Europe also posted the largest-ever declines, according to a separate trade report released last month. Today’s trade figures don’t include regional breakdowns.

Toyota is expecting its first annual loss in 59 years as vehicle sales plunge in the U.S., Japan and Europe, its biggest markets. Every 1 yen gain against the dollar cuts Toyota’s annual operating profit by 40 billion yen.

Five Decades

Sharp, the country’s largest maker of liquid-crystal- display televisions, will post its first loss in more than five decades and cut 1,500 temporary jobs because of falling sales.

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