TOKYO, Feb 9 – Japan\’s current account surplus shrank at a record pace in 2008 as the economic crisis hit exports, while machinery orders fell for a third straight month in December, official figures showed Monday.
Japan, the world\’s second biggest economy, has seen a slew of gloomy news in recent weeks as the global downturn crushes demand for its cars, electronics and other goods, deepening the country\’s first recession in seven years.
The current account surplus dropped 34.3 percent in 2008 from the previous year to 16.28 trillion yen (176.8 billion dollars), the first fall in three years, according to the finance ministry.
It was the biggest decline since comparable records began in 1986, a ministry official said.
The trade surplus alone plunged 67.3 percent last year to 4.03 trillion yen. Exports slipped 3.0 percent while imports rose 8.8 percent.
"The unprecedented decline resulted from a combination of a surge in oil prices in the early part of last year and a sizable drop in exports late last year," said Hideki Matsumura, an analyst at Japan Research Institute.
In December alone, Japan\’s current account surplus plunged 92.1 percent from a year earlier to 125.4 billion yen, as exports slumped 35.1 percent due to weak demand from recession-hit overseas economies.
Japan logged a trade deficit of 197.9 billion yen for the month, against a surplus of 996.8 billion yen a year earlier.
"The impact of the global economic crisis is extremely big for countries like Japan, which relies heavily on trade," Matsumura said, warning that Japan\’s trade balance would likely remain in deficit for the time being.
The slump in exports has taken a heavy toll on Japanese manufacturers, many of which are now losing money and reducing jobs and investment in factories and equipment.
As a result, Japan\’s core machinery orders, a key gauge of corporate capital spending, fell 1.7 percent in December from the previous month, the third consecutive month-on-month fall, the government said.
The core private-sector machinery orders, which exclude particularly volatile demand from power companies and for ships, had already plunged 16.2 percent plunge in November.
The fall in December was smaller than the market\’s average forecast for a 8.9 percent decline thanks to robust orders in the steel industry, which analysts said may have been placed by China.
But for the fourth quarter of 2008 as a whole orders plunged 16.7 percent and analysts said corporate capital spending was likely to remain weak.
"Major manufacturers are slowing production and reviewing investment," said Hiroshi Watanabe, an analyst at Daiwa Institute of Research.
"Machinery orders are expected to be in a weak trend for now as there is no sign of a recovery in either the Japanese or the global economy."
On Sunday, Japan\’s economics minister Kaoru Yosano said the government may consider offering an extra economic stimulus package if the economy deteriorates further.
Prime Minister Taro Aso in December announced a stimulus package worth 23 trillion yen, in addition to a 26.9 trillion yen package unveiled in October.
Aso has said he wants Japan to be the first developed country to exit recession, but Yosano said late last month that it was impossible to say when Asia\’s biggest economy would bottom out.