JAPAN HAS posted its biggest ever trade deficit for the month of July following a collapse in shipments to the EU, the country’s third most important trading partner.
Exports from Japan to the EU fell by a quarter from the same month last year.
As fuel imports remained high to replace lost nuclear capacity, Japan’s monthly deficit was pushed to 517 billion yen. That was almost twice as wide as consensus forecasts, and the biggest for July since records began in 1979.
“We can’t see any encouraging signs in Europe,” said Yuichiro Nagai, Tokyo-based economist at Barclays.
Economists worry that persistent weakness in peripheral euro economies, such as Spain, Italy and Greece, could eventually spread to core economies such as Germany and the Netherlands.
Demand for Japanese products was weaker in every western European nation except Ireland, with falls in the value of exports ranging from a fifth in Germany to about a third in France, Italy and the UK. Declines were steepest for big-ticket items such as cars, down 27 per cent, and machinery, down 28 per cent.
The Japanese export slump comes as EU states are mulling over whether to begin negotiations with Tokyo on an EU-Japan free-trade agreement.
The European Commission last month called for such a pact, arguing that it was vital to stoke growth and create jobs. However, Europe’s struggling car-makers are expected to mount a strong campaign against it.
The EU figures contrasted with more upbeat readings from the US, Japan’s second biggest trading partner after China, where a 4.7 per cent rise in the overall value of exports was led by cars and car parts.
