Japan Leads Rich Nations Downward
Tuesday, March 10, 2009
TOKYO, March 9 -- In the global descent into recession, Japan continues to lead the way.
Plunging exports -- down by a record 46.3 percent in January, as sales of cars, electronics and machinery all continued to sputter -- pushed Japan's current account deficit to a record monthly high, the government said Monday.
Overall, the Japanese economy shrank last year by 12.7 percent -- far faster than the world's other major industrialized countries. A strong yen increased the value of Japanese exports last fall just as demand for them was disappearing.
The benchmark Nikkei stock average closed Monday at a 26-year low. Bankruptcies were up 10 percent in February, rising for the ninth consecutive month. The number of families living on welfare has hit a record, and Prime Minister Taro Aso said last week there is "no bottom in sight" for the world's second-largest economy.
The current account is the broadest measure of Japan's global trade and it has traditionally been a robust number that quantified the country's extraordinary ability to make itself rich by selling high-quality goods to the United States, Europe and China. But in January the deficit in the current account reached a record $1.8 billion -- a figure that is seven times larger than any monthly trade deficit since comparable records began to be kept in 1985.
Analysts said there is little chance that Japan's trade balance or its fast-shrinking economy can recover until the United States pulls out of its economic tailspin and consumers resume buying Japanese cars and other exports. Growth in Japan depends exclusively on growth in exports, with the U.S. market the major driver in car sales.
Exports to the United States dropped 52.9 percent in January compared with a year earlier. They were down 47.4 percent to Europe and 46.7 percent to Asia.
Compared with their counterparts in the United States, Europe and China, politicians in Japan have been slow and relatively unimaginative in coming up with policy measures that might stimulate the economy.
After nearly four months of arguing, the government last week passed a stimulus package that will give each person in Japan about $130. But the public, according to opinion polls, does not approve of the cash handout and does not think it will help revive the economy.
The government led by Aso is deeply unpopular and the public is demanding that he call an election soon. An election must be held by September. Polls now show that Aso and his ruling Liberal Democratic Party are likely to be tossed out of power.
Meanwhile, consumer spending -- never all that robust in this aging country -- has declined steeply. The Bank of Japan has begun buying some stocks and bonds from companies in order to prop up the stock market and ease a credit squeeze.
The number of households on welfare reached a record 1.2 million in January, according to a survey published Monday in the Asahi newspaper. It said applications for public assistance were up 30 percent in January over December.
Increases in the number of people requesting welfare were greatest in regions where large numbers work in car and electronics factories. Many who have lost their jobs were classified as "non-regular" employees, a term that is applied to immigrants and part-time workers.
Most of these workers do not qualify, under Japanese law, for unemployment insurance -- and so they often apply for welfare assistance.