Japan's recession woes deepened as a record plunge in exports added to fears Wednesday that Asia's largest economy is becoming one of the biggest victims of the global crisis. Japan's reliance on foreign markets to drive its recovery from a decade-long slump has left it particularly exposed to the global economic downturn, which has crushed demand for its cars, televisions and high-tech goods.
The trade deficit ballooned to 952.6 billion yen (9.9 billion dollars) in January as exports plunged 45.7 percent from a year earlier, the finance ministry reported. It was the biggest deficit since comparable records began in 1979, marking a dramatic shift in fortunes for Japan's economy, which used to enjoy large trade surpluses.
"Japan is particularly vulnerable to this downturn because trade is so central to the economy," World Trade Organisation chief Pascal Lamy told reporters on a visit to Tokyo. Demand for Japanese exports has been crushed by a slump in world-wide consumer spending, pushing the world's second largest economy into its worst recession in decades.
Japanese exports to the United States, the European Union and even the once-resilient Chinese economy roughly halved in January. Car exports plunged more than two-thirds as automakers idled plants in response to slumping sales. Few analysts are optimistic about the chances of a significant rebound in Japanese shipments any time soon.
Japan's top automakers said Wednesday they had sharply reduced their production in January in response to a slump in sales. Toyota Motor, the world number one, said its global output had fallen 42.6 percent in January from a year earlier, while Nissan Motor reported a 54.0 percent plunge and Honda logged a 33.5 percent drop.