Leo Lewis, Asia Business Correspondent and Christine Buckley, Industrial Editor
Japan's trade with the rest of the world took what economists described as a “horrific” nosedive in February, with imports and exports plummeting by their sharpest monthly margins on record as the world stopped buying Japanese goods.
With vehicle and electronics sales in dramatic decline across developed and emerging markets, Japanese exports were halved. The 49.4 per cent year-on-year plunge in February marked the fourth month running of record export declines. Imports were down by more than 40 per cent.
Japan's car industry trade body said that this year could produce the worst sales figures for 32 years. The Japan Automobile Manufacturers Association (Jama) expects an 8 per cent fall in sales this year, after a 12 per cent decline last year. It is seeking government help to boost the Japanese market, the third-biggest in the world.
Yet in spite of the tide of bad news for Asia's biggest economy, some analysts believe that Wednesday's figures contained flickers of hope and offered evidence that Japanese companies were responding properly to the crisis.
Exports fell hard, but the rate of increase in that decline was far smaller than in previous months. The massive inventory overhang, which cast such a dark shadow over Japan's economy, may be starting to fade, Richard Jerram, a Macquarie economist, said.
For the first time in five months, Japan clawed back a trade surplus in February. It hit only 82.4 billion yen (£578 million), but that was a significant reversal of the Y957 billion deficit in January.
Much of that was the effect of the retrenchment going on among Japan's largest manufacturers, analysts in Tokyo Mitsubishi UFJ said, referring to a battening-down of the hatches that has caused imports to fall at an unprecedented pace.
Japanese companies, once seen as making corporate decisions at tortoise speed, have responded to collapsing international markets with a ferocity and decisiveness that few thought possible. Big carmakers have stopped production, shifts have been reduced in electronics factories and staffing has been cut in many sectors.
Japan's car market has been hit hard by the global contraction in motor sales. However, the market has been suffering a milder decline for three years amid a population shift to cities, which have good public transport.
Jama is hoping for a boost to the market from legislation expected to be passed next week to encourage motorists to buy low-emission vehicles. Satoshi Aoki, Jama's chairman, said: “With the Japanese economy weakening and the outlook for employment looking very uncertain, consumers are in no mood to buy a car.”
Jama is pushing for wider incentives, possibly such as the scrappage bonus operating in Germany and France. This offers an incentive for buying a new car. Mr Aoki said: “We need to prop up demand further on a broader basis. Germany's system could be one guide and we want to seek help from the Government.” Germany's new car sales rose 21 per cent in February.
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