Japan Posts Record Trade Deficit in January

By Tomoko A. Hosaka

TOKYO -- Japan posted a record trade deficit in January, with exports tumbling 46% from a year earlier, as the global economic downturn tightened its stranglehold on overseas demand.

The Ministry of Finance said the trade deficit for the month widened to 952.6 billion yen ($9.92 billion) -- the fourth straight month that imports exceeded exports. It was the biggest trade deficit since the government began compiling comparable data in 1979.

Japan, long criticized by trading partners for its big trade surpluses, has become a net importer in recent months because of the global slump. Exports were cut nearly in half, as shipments of cars, machinery, electronics and semiconductors to all major markets plunged.

The latest data mirrors the sharp declines throughout the export-reliant continent and signals that the pain in Asia may only deepen in the months ahead. South Korean exports fell a record 33% in January from the previous year, Taiwan's retreated 43%, and Singapore's fell 35%.

Like its neighbors, Japan is mired in an ever-worsening recession, with manufacturers including Toyota (TM) and Sony (SNE) scrambling to slash production and jobs.

Japan's economy, the world's second-largest, shrank at its fastest rate in 35 years in the fourth quarter and at more than triple the pace of the 3.8% annualized contraction in the U.S.

"Further downside seems in store for January-March as a whole, based on reports such as suspensions of production in the auto industry," said Goldman Sachs economist Chiwoong Lee in a note to clients. "This implies further manufacturing layoffs and labor market deterioration."