Tue Jan 24, 2012, 08:05 PM
DCBob (19,983 posts)
Japan logs first trade deficit since 1980
TOKYO (Reuters) - Japan logged its first annual trade deficit in 2011 for over 30 years as the aftermath of the March earthquake raised fuel import costs even as slowing global growth and the yen's strength hit exports, threatening to erode the country's ability to fund its huge public debt with domestic savings.
But the trade data underscores a broader trend in which Japan's competitive edge in the global market is eroding and it is increasingly reliant on fuel imports due to the loss of nuclear power, with reactors staying closed after routine checks due to public safety fears following the March disaster.
"What it means is that the time when Japan runs out of savings -- 'Sayonara net creditor country' -- that point is coming closer," said Jesper Koll, head of equities research at JPMorgan in Japan.
"It means Japan becomes dependent on global savings to fund its deficit and either the currency weakens or interest rates rise."
The quake/tidal wave/nuke disaster certainly has had a tremendous negative impact on Japan's economy.
5 replies, 818 views
Japan logs first trade deficit since 1980 (Original post)
Response to muriel_volestrangler (Reply #1)
Wed Jan 25, 2012, 12:34 AM
Art_from_Ark (25,664 posts)
2. That's another thing that's hurting Japan right now-- the excessively strong yen
It's killing exports, and Japanese companies that do business in other countries and have contracts based on the local currency are really getting clobbered right now. I know a Japanese manager whose company is getting killed with a triple whammy-- their Chinese subsidiary stole their technology and are using it to undercut the parent company, one of the manufacturing plants suffered extensive damage as a result of the earthquake, and their Euro-based contracts are losing them money. The manager says that they more they sell to their European customers, the more they lose, because the contracts were negotiated when the Euro was much stronger (=could be exchanged for more yen) than it is today.
Response to Bonobo (Reply #3)
Wed Jan 25, 2012, 03:34 AM
Art_from_Ark (25,664 posts)
4. Since 1971, the yen has appreciated 470% versus the US dollar
That is, it has gone from 360/dollar in early 1971 to 76 and change today.
No other country in the world today, especially no major exporting country, has had to deal with a currency that has *gained* so much in value vs. the dollar in such a relatively short time.
Response to Art_from_Ark (Reply #2)
Wed Jan 25, 2012, 07:00 AM
davidpdx (21,535 posts)
5. That is fucked up
The first mistake was trusting the Chinese with propitiatory technology. The earthquake/tsunami/power plant disaster didn't help either. Lots of Japanese manufacturers were hurt by that. Toyota has had a tough time recovering from their factories being down.