Japan's exports plummeted to their lowest annual level since 2009 with the raging COVID-19 pandemic destroying demand for the industrial products at the heart of the country's export-oriented economy.
The good news was that Japan saw a balance of trade surplus.
Imports were slashed by 13.8% to $655.2 billion, the steepest decrease since a 15.8% battering in 2016. Analysts said the lower imports were linked to lower prices for crude oil and other energy products. The amount was the smallest since $638.8 billion in 2016.
Preliminary data from the Ministry of Finance released Wednesday revealed an 11.1% plunge in exports year-on-year to $660 billion as demand for cars, ships and machine tools withered. The decline was the largest since the steep 33.1% drop in 2009 due to the Great Recession of 2008-2009.
Car exports were the worst hit by the export slump, plummeting 20% from 2019, the biggest drop since a 51.3% tumble in 2009. Exports of auto parts slid 19.1%.
"Exports are stalling due to restrictions aimed at preventing the spread of coronavirus infections in Europe and America," said Yutaro Suzuki, economist at Daiwa Institute of Research. "A supply crunch among automakers caused by a shortage of chips could weigh on exports."
The United States remained Japan's top export market despite reduced exports of 17.3% to $122 billion, mostly due to a 19.2% tumble in car exports. Imports from the U.S. were down 14% to $71.9 billion as demand for aircraft and their engines shriveled.
Still, analysts said a recovery in exports might ease the risk of a double-dip recession occurring this year with some momentum from a 2.0% gain in exports in December year-on-year.
Japan upgraded its gross domestic product growth projection for the next fiscal year beginning April to 3.9% from an estimate of 3.6% in October - reflecting the success of the government's measures to combat COVID-19 gradually waning, the country's central bank said Thursday.
