Japan account in first deficit since 1996 Leo Lewis, Asia Business Correspondent From Times OnlineMarch 9, 2009 http://business.timesonline.co.uk/tol/business/economics/article5872915.ece
Japan’s current account plunged into its first deficit for 13 years in January, as the “irrational” strength of the yen obliterated the overseas profits of the country’s main exporters.
The Government’s figures, which were described as “stunningly bad” in Tokyo dealing rooms, showed the widest deficit since records were rebased in the early 1980s.
The news heaped yet more misery on already panicky financial markets, sending Tokyo's Nikkei down to a 26-year low in an across-the-board sell-off of the companies hardest hit by the slackening of global consumption.
The January deficit figures, which measure Japan’s trade position with the world beyond its borders, weighed-in at 172.8 billion yen (£1.25 billion).
That was markedly worse than the Y19.3 billion consensus forecasts in the market, and caused some economists to conclude that a significant rethink may now be necessary when calculating the future of the world’s second-biggest economy.
The current account is expected to remain in deficit for several months to come.
Japan’s most recent quarterly GDP report showed the country’s economy contracting at an annualised pace of 12.7 per cent, and a growing number of analysts believe that the double-digit pace of decline may be repeated in the current quarter ending on March 31.
To make matters worse, confidence in the hardiness of the Japanese domestic economy is sinking fast.
A record proportion of the population is now on welfare, and some estimates suggest that unemployment may rise from its present 4.4 per cent to as much as 10 per cent by the end of this year.
Within the January trade figures was 31.7 per cent fall in imports, a reversal described as “shocking” by analysts at Nomura Securities and yet another unsettling sign of just how quickly Japanese households have retrenched and how quickly corporate Japan has slashed production in its effort to avoid burgeoning inventories of unsold stock.
