Page last updated at 09:52 GMT, Thursday, 25 September 2008 10:52 UK

Japan posts a rare trade deficit

Japanese car production line
Falling demand for Japanese cars weighed on exports

Japan's trade gap slipped into the red in August as oil imports surged but exports fell, official figures show.

Excluding January - when exports usually slow in the New Year holidays - it was the country's first trade deficit since November 1982.

Imports outpaced exports by 324bn yen ($3.09bn; 1.65bn) in August.

The news has heightened fears Japan may be on the brink of recession as it comes hot on the heels of a sharp contraction in economic growth.

Figures released earlier this month showed economic output shrank at an annualised rate of 3% between April and June - its sharpest fall in almost seven years - as a result of falling exports and domestic demand.

Price pressures

The latest trade gap figures showed the resource-poor country was hit heavily by surging raw material costs.

The data really showed that economic conditions both in Japan and overseas are weakening
Satoru Ogasawara, strategist, Credit Suisse

Rising prices of oil, coal and natural gas drove import costs 17.3% higher to 7.38 trillion yen. Import costs for coal alone jumped 121% and petroleum products by 64%.

By contrast, exports grew just 0.3% to 7.56 trillion yen - mainly as a result of falling automobile shipments.

A record 21% drop in exports to the US, blamed on the current financial crisis, did little to ease fears about a looming downturn in Japan.

'Faltering'

"The data really showed that economic conditions both in Japan and overseas are weakening," Credit Suisse strategist Satoru Ogasawara said.

"Demand from not only the United States but also Europe and Asia has been faltering, and it is likely to continue at least until the end of this fiscal year."

Meanwhile, companies at home have been battling low domestic demand.

Looking ahead, economists believe the news does not bode well for the Tankan report, due out next week.

The closely-watched survey of business conditions is expected to "underscore that the economy is in a recession", said JP Morgan Securities economist Masamichi Adachi.

A country is generally considered to be in recession when it sees two consecutive quarters of declining economic output.



Print Sponsor


SEE ALSO
Japan's economy sees a sharp fall
12 Sep 08 |  Business
Japan unveils economic boost plan
29 Aug 08 |  Business
Tax row hits Japan economy deal
26 Aug 08 |  Business
Japan surplus down as US weakens
21 Aug 08 |  Business
Japan keeps interest rate on hold
19 Aug 08 |  Business
Cheaper oil lifts Japanese trade
22 Feb 07 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2020 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific