Japan: Exports drop in March, showing first effects of Tohoku quake
April 18, 2011
On 19 April, the Finance Ministry released the first trade figures to shed light on the extent of the economic impact on the world's third largest economy, following the 11 March earthquake, which hampered power generation and disrupted the supply chain in several key industries. Exports in March drooped 2.2% over the same month the previous year (February: +9.0% year-on-year), recording the first annual contraction in 16 months and falling short of an expected 1.1% decline. On the other hand, imports expanded 11.9%, overshooting the 9.9% growth recorded in the previous month and the 7.6% increase anticipated by the markets. As a result, the trade balance shrunk from JPY 654 billion (USD 7.9 billion) to JPY 196 billion (USD 2.4 billion) in March. Exports were dragged down mainly as a result of lower shipments of motor vehicles (-27.8% yoy), which account for 10% of the total exports, while imports were spurred by higher commodity prices. A monthly analysis points to an even steeper decline in exports than suggested by the annual figures. Overseas shipments dived a seasonally adjusted 7.73% over the previous month (February: +4.60% month-on-month), while imports declined a more moderate 1.40% (February: +0.65% mom). Moreover, the moving 3-month sum in exports declined from JPY 16.7 trillion in February to JPY 16.4 trillion, sinking further below the pre-crisis peak. Exports, which became the main engine during the recovery process, are likely to decline in the coming months as industrial production remains subdued.