The Japanese exports drastically fell during November 2008 owing to weak consumer demand, global economic slowdown and depreciation in dollar.
The Japanese Finance Ministry said, exports from the country fell to very low in November 2008, as reported by Bloomberg.
The Ministry revealed that exports slumped 26.7% in November 2008 over the same month a year ago. In fact, this was much below the estimated decline of 22.3% and the steepest since 1980 when the comparison of data started. The shipments to the US witnessed a drastic drop of 34%, while the exports to China slammed to the lowest level of 24.5% in 13 years. Besides, the exports to EU slumped 30.8% and the vehicle shipments to the region declined 37.2%. Moreover, the exports to the Asian countries witnessed decline of 26.7%, with the shipments of semiconductor dropping by 30.2%.
Weak consumer demand for electronic parts, automobiles and other major exporting products from Japan is largely responsible for decline in exports. Russia, the US and European countries, which import hugely from Japan, are experiencing low consumer demand. Moreover, the deteriorating global economy has affected the demand of Japanese products.
Apart from this, appreciation of the domestic currency (Yen) – that surged to the highest level in 13 years (since 1995) - has further added to the woes of exporters.
In addition, companies are facing huge difficulties in taking credit due to the financial crisis, resulting in investors’ low confidence to buy corporate debt. To ease down the mounting pressure on businesses, the Bank of Japan announced in the third week of December 2008 to buy commercial paper. This would be the first time when the bank buys commercial paper.
Moreover, the trade gap in Japan rose steeply during November 2008, reversing the surplus trend recorded in the same month last year. The reason for this difference is decline in exports outpaced the downfall in imports. The total exports were recorded at 5.3 Trillion Yen ($60 Billion), whereas imports reached 5.55 Trillion Yen ($62 Billion), down 14.4% from November 2008.
According to a Research Analyst at RNCOS, “The impact of the global economic downturn is clearly visible on Japanese exports. On top of that, the country’s GDP dropped in the third and fourth quarters, pushing Japan into recession for the first time after 2001.This may result in closing down of more factories and layoff practice may become more prevalent in coming months.”
