Japan posts trade deficit in October, exports dive

http://news.yahoo.com/s/ap/20081120/ap_on_bi_ge/as_japan_trade_2

By JAY ALABASTER, Associated Press Writer Jay Alabaster, Associated Press Writer – Thu Nov 20, 1:07 am ET

TOKYO – Japan posted its second trade deficit in three months in October as exports of goods such as cars and electronic gadgets suffered a record fall, adding to a grim outlook for the world's second-largest economy.

The trade deficit, a rarity for Japan, follows confirmation earlier this week that the nation had slipped into recession and comes as a slew of major manufacturers, hit by waning global demand, announce production cuts.


Japan's economy is dependent on exports, but they plunged 7.7 percent in October from a year earlier, the biggest drop since 2001, according to government figures released Thursday.

The country reported double-digit drops in sales of automobiles and electronics, two pillars of the economy. That included big falls in exports to the U.S. and Europe, where the 15-country euro-zone is also in a recession.

With scarce natural resources, Japan must purchase many necessities abroad — it is the world's largest importer of food and imports nearly all of its oil. While imports are down from recent months as oil prices eased, they were still 7.4 percent higher than a year earlier.

The combination of falling exports and a rise in imports led to a 63.9 billion yen ($666 million) deficit for the month. Japan also posted a deficit in August, but before that had not had one in 26 years. This excludes the month of January, when trade deficits are more common because of the slowdown for the New Year holidays.

As the global economy grinds to a halt, many of Japan's big-name exporters are scaling back production. Isuzu said Thursday it would cut 1,400 contract workers as it lowers its truck output, after similar slashes in production by Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.

Electronics makers such as Sharp Corp. are also mulling production cuts in mainline products like LCD TVs as sales cool abroad.

Exports totaled 6.93 trillion yen ($72.2 billion), versus imports of 6.99 trillion yen ($72.8 billion).

In August, Japan posted a 332.1 billion yen deficit, which swung to an 88.5 billion yen surplus in September.

Shares in Tokyo fell Thursday following a big retreat overnight on Wall Street. Japan's benchmark Nikkei 225 stock index was down almost 6 percent at 7,794.13 during afternoon trade.