Japan exports post record drop in December

TOKYO - Japan's exports plummeted at a record pace in December, as a spreading global slowdown choked off demand for the country's cars and gadgets.

Exports fell for the third straight month, plunging 35 percent from the same month a year ago to 4.83 trillion yen ($54.27 billion), the Ministry of Finance said Thursday. The drop surpassed the previous record, November's 26.7 percent retreat.

Even demand from emerging markets, which earlier had partly offset declines in North America and Europe, dropped.

The pain is being felt across much of Asia. China's exports fell in November and December for the first time in seven years, while in Singapore non-oil exports tumbled 21 percent in December, the most in almost seven years.

The figures underscore the vulnerability of Asia's export-dependent economies during global downturns and point toward more cuts in jobs, production and profits in the coming months. Major brands including Toyota Motor Corp. and Sony Corp. have slashed thousands of workers and scaled back factory lines.

Japan's economy, already in recession, could shrink further, economists warn.

"Reports such as plant holidays at automakers suggest further downside for January-March," said Goldman Sachs economist Chiwoong Lee in a note to clients. "In turn, production cuts are likely to spur layoffs in manufacturing and depress the labor market further."

Akira Maekawa, chief economist at UBS Securities in Tokyo, this week downgraded his outlook for Japan's economy, the world's second-largest. He now expects gross domestic product to have contracted by 10.7 percent in the fourth quarter and predicts GDP to decline 2.6 percent this year.

The economic downturn in 2009 "should be much deeper than our original expectation, as we assess that external demand for Japan's exports which had been the growth driver for the past few years should be deteriorating further and faster than we had originally anticipated," Maekawa said.

The strong yen has also taken a toll on exporters. While the dollar bought about 113 yen a year ago, it now gets about 90, meaning Japanese products are more expensive abroad and the value of overseas profits is lower.

Sony, which is particularly vulnerable to the strong yen because about 80 percent of its sales are from overseas markets, said Thursday it would likely report its first annual net loss in 15 years.

Japan, which had for years faced criticism by its trading partners, especially the U.S., over its trade surplus, has turned into a net importer in recent months amid the global crisis.

Its deficit in December came to 320.7 billion yen ($3.60 billion), staying in the red for the third straight month, the ministry said. Imports in the month fell 21.5 percent to 5.15 trillion yen ($57.87 billion).

In 2008, Japan's trade surplus shrank 80 percent from the previous year to 2.16 trillion yen ($24.27 trillion), with exports down 3.4 percent and imports up 7.9 percent, the ministry said.

Exports to the United States tumbled by a record 36.9 percent in December, marking the 16th consecutive year-on-year decline. Vehicle shipments to the U.S. plummeted by more than 50 percent, while exports of auto parts declined 41.8 percent and those of audio equipment fell 60.9 percent.

Japan's exports to Europe tumbled by 41.8 percent, with vehicle shipment to the region plunging by 63.4 percent, the ministry said.

Exports to the rest of Asia fell by 36.4 percent as semiconductor shipments declined by 40 percent. Exports to China alone fell 35.5 percent.

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Associated Press writer Mari Yamaguchi contributed to this report.

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