TOKYO (AFP) – Japan’s economic malaise deepened yesterday as dismal trade figures and another wave of bankruptcies sent the Nikkei stock index tumbling to its lowest level in more than 26 years.
Japan logged a record current account deficit in January, the first such month in the red in 13 years, as the global downturn chokes exports and pushes Asia’s biggest economy deeper into crisis.
“The Japanese economy has continued to deteriorate rapidly, and is in a severe state,” Vice Finance Minister Kazuyuki Sugimoto told reporters. “The deterioration is likely to continue for a while.”
The export-dependent economy has been hammered by a worldwide drop in demand for the cars, high-tech goods and machinery in which Japan excels, putting it on course for its worst recession since World War II.
Japan logged a deficit of 172.8 billion yen (100 yen = RM3.79) in January in its current account, the broadest measure of trade in goods and services, as exports almost halved from a year earlier, according to official data.
“Exports are crumbling at a speed never seen before,” said Norio Miyazaki, economist at Shinko Research Institute. “There is no way out of the current situation for Japan for a while.”
The trade figures sent the Nikkei tumbling 1.21 per cent to end at 7,086.03 points, the lowest closing level since October 6 1982. The benchmark index has fallen 20 per cent so far in 2009, after a record 42 per cent slump last year.
“Japan is dependent on overseas demand, so the economy is unlikely to recover unless exports pick up again,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
“But as this data shows, a recovery scenario remains out of reach,” he said.
There was more bad news from the corporate sector as a new survey showed that 1,318 companies went bankrupt in Japan in February, up 10 per cent from a year ago.
The human cost of the crisis also widened as the number of Japanese households living on welfare hit a record high of 1.168 million in January, up about 8,700 from the previous month, a survey by the Asahi newspaper showed.
Historically, Japan has enjoyed brisk exports and large surpluses in its current account, helping to drive the country’s post-war rise to become the second-largest economy in the world.
But the global crisis has prompted consumers to tighten their purse-strings in key export markets in the US and Europe, forcing Japanese companies such as Toyota and Sony to launch a wave of job cuts.
The downturn in exports is likely to continue for at least another year until firms reduce their stockpiles, said Hiroshi Watanabe, senior economist at Daiwa Research Institute.