Page last updated at 04:18 GMT, Wednesday, 22 April 2009 05:18 UK

Japan reports rare trade deficit

Panasonic showroom, Feb 09, Japan
World demand for Japanese products has plummeted in recent months

Japan has reported its first annual trade deficit in 28 years, with exports in the year to March down 16% from the previous year.

Total exports in February and March were half of what they had been a year earlier, the finance ministry said.

Demand in the United States and Europe for Japanese cars and electronics has remained low amid global economic woes.

But analysts say a slowing of the drop in sales to China indicates Beijing's economic stimulus may be taking hold.

Japan's exports fell 45.6% in March compared with a year earlier, largely in line with forecasts, while imports fell 36.7%, Ministry of Finance data showed.

Despite the annual deficit, that produced a small surplus of 11.0bn yen ($111.5m; £76.1m) for the month of March.

China hope?

However, exports to China fell only 31.5% in March from a year earlier, compared to a 39.7% decline in February and one of 45.2% in January.

This improvement has persuaded analysts to see signs of hope, at least within Asian trade.

Reuters quoted Yoshiki Shinke, senior economist at the Dai-Ichi Research Institute as suggesting the pace of decline may slow in the next quarter.

"The worst of the decline in exports may be over, and there are some positives to take from this data. Exports to China are falling at a slower pace and may improve further due to the Chinese government's stimulus package.

"The fall in imports show domestic demand and capital expenditure are weak, and that is certainly nothing to cheer about," he added.

Exports to Asia fell 39.5% in March from a year earlier, while exports to the US dropped 51.4%, and those to the European Union were down 56.1%.

Japanese newspapers have reported expectations that economic growth forecasts would be lowered again, to a 3% contraction, due to the rapid deterioration in trade and production.

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