Japan posts record current account deficit

[March 09, 2009]  TOKYO (AP) -- Japan posted a record current account deficit in January, plunging into the red for the first time in 13 years due to plummeting demand for Japanese exports and a deepening global downturn, the Ministry of Finance said Monday.

The deficit stood at a record 172.8 billion yen ($1.8 billion) in January, far bigger than the previous deficit record of 25.6 billion yen in January 1996, the ministry said.

The current account is Japan's broadest measure of trade in goods and services with the rest of the world.

"We incurred the current account deficit due to a plunge in exports. Our exports to key regions, including the United States, Europe and Asia, were all down sharply due to the deteriorating global economy," said ministry official Michito Yamagami.

Exports in January dropped a record 46.3 percent from a year earlier to 3.28 trillion yen, marking the fourth consecutive month of year-on-year declines. Imports fell 31.7 percent to 4.13 trillion yen, resulting in a trade deficit of 844.4 billion yen in January.

Japan's exports to the United States, the world's largest economy, dropped 52.9 percent, while Asia-bound shipments fell 46.7 percent from a year earlier, the ministry said. Japan's exports to the European Union declined 47.4 percent.

"The current account deficit and the dismal exports data clearly reflected weakening demand for Japanese goods amid a global recession," said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

"Consumers in Asia, Europe, the Middle East and the United States are not buying pricey Japanese goods such as cars and electronics goods," Watanabe said. "Japan's export-driven economy is really engulfed by waves of the global economic crisis."

Among exported products, Japan's vehicle shipments nose-dived 66.1 percent with shipments of auto parts down 51.9 percent year-on-year in January. Exports of semiconductor and electronics parts products dropped 52.8 percent.

The current account is calculated by determining the difference between Japan's income from foreign sources against payments on foreign obligations and excludes net capital investment.

[Associated Press; By SHINO YUASA]

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