Japan current account plunges

Japan’s exports in January dropped a record 46.3 per cent from a year earlier to 3.28 trillion yen, marking the fourth consecutive month of year-on-year declines as the country grapples with its worst recession in decades.

Japan’s exports to the US fell 52.9 per cent, while shipments to Asia dropped 46.7 per cent from a year earlier.

Exports to the European Union fell 47.4 per cent.

Job cuts

The sharp drop in exports has triggered production and job cuts among manufacturing giants such as Toyota and Sony, and put the economy on course for its longest recession in the post-war era.

Japan’s income surplus slipped 31.5 per cent from a year earlier, due to lower interest rates and dividend payments from overseas.

A stronger yen in January also reduced the value of income from overseas investments, a finance ministry official said.

Akira Maekawa, a senior economist at UBS, explained that “we have seen the declines in exports, and now we see the income balance declining because the global financial crisis is cutting earnings on overseas investments”.

Maekawa told the Reuters news agency that this was “a bad development for an export-oriented economy” and warned of a “further deterioration in the current account balance”.

The country’s benchmark Nikkei stock average fell 1.7 per cent to a four-month low in Monday morning trade.