By Keiko Ujikane
April 8 (Bloomberg) -- Japan’s current-account surplus narrowed in February as the global recession caused exports to plunge an unprecedented 50.4 percent.
The surplus shrank 55.6 percent to 1.117 trillion yen ($11 billion) from a year earlier, the Ministry of Finance said in Tokyo today. Japan had a 172.8 billion yen deficit in January, its first in 13 years.
The return to a surplus was because of a record drop in imports, suggesting demand at home is also weakening as companies from Nissan Motor Corp. to Panasonic Corp. cut output and fire workers. Confidence at large manufacturers fell to a record low in March and executives signaled more spending and job cuts, the Bank of Japan’s Tankan survey showed last week.
“Exports are unlikely to recover largely anytime soon,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “The large decline in imports shows the domestic economy is deteriorating.”
The year-on-year drop in exports was the biggest since comparable data were made available in January 1985, as was the 44.9 percent slide in imports.
The yen traded at 100.36 per dollar at 10:57 a.m. in Tokyo from 100.66 before the report was published. The currency has lost 9.7 percent of its value this year, providing some relief to exporters by making their products more competitive abroad.
Shrinking Economy
Bank of Japan Governor Masaaki Shirakawa said yesterday that the economy has worsened since January, when his policy board forecast a 2 percent contraction for the year that started April 1.
The world’s second-largest economy probably shrank an annual 10.9 percent pace in the first quarter, according to the median estimate of 13 economists surveyed by Bloomberg News. That would follow a 12.1 percent decline in the fourth quarter, the sharpest since 1974.
Dai-Ichi Life Research’s Shinke said the economy may have shrunk an annualized 14.2 percent last quarter, the most on record.
“The return to a surplus from a deficit doesn’t mean Japan’s economy is recovering,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “The declining trend for exports is still ongoing.”
Shipments to the U.S., the country’s biggest market, plunged an unprecedented 58.4 percent in February from a year earlier, and exports to Europe and Asia dropped, according to a separate trade report released last month. Today’s figures don’t include regional breakdowns.
Automakers’ Woes
Toyota Motor Corp. and Nissan led a 56 percent decline in Japan’s domestic vehicle production in February, the biggest drop since at least 1967, according to the Japan Automobile Manufacturers Association.
Panasonic, the world’s biggest consumer electronics maker, said in February that it plans to eliminate about 15,000 jobs and predicted its first loss in six years.
The income surplus, the difference between money earned abroad and payments made to foreign investors in Japan, narrowed 34.1 percent to 1.1 trillion yen from a year earlier, today’s report showed.
The seasonally adjusted current-account surplus widened to 673.4 billion yen in February from a month earlier, today’s report showed.
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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