Japan's exports fell for the first time in 16 months and its trade surplus plunged after a record earthquake and tsunami hit production, the finance ministry said today.
The country may fall into a trade deficit in the near term amid rising oil and raw material prices, which inflated the value of March imports and ate into the trade balance, analysts said.
The latest data further illustrate the emerging impact of the March 11 disasters, in which a 9.0-magnitude earthquake and the tsunami it unleashed devastated swathes of the northeast coast and triggered an atomic emergency.
Economists see Japan sliding into a temporary recession after the devastation to infrastructure and manufacturing facilities in the northeast, amid the nation's worst crisis since World War II.
"If Japan posts a trade deficit in April and May, GDP is also likely to contract in the April-June period," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
Japan's trade surplus in March stood at 196.5 billion yen (USD 2.37 billion), down 78.9 per cent but still managing to stay in the black for the second successive month, the finance ministry said.
Exports in March dropped 2.2 per cent to 5.87 trillion yen, falling for the first time in 16 months due to reduced shipments of automobiles, it said.
Expectations in a joint poll by Dow Jones and the Nikkei financial daily had been of a 2.0 percent decline.
The fall was led by vehicle exports, which contracted 27.8 per cent, the ministry said, after Japan's leading automakers were forced to halt production amid broken supply chains and power shortages.
The export fall is likely to continue, said Japan Foreign Trade Council chairman Shoei Utsuda.
"I cannot help but think the fall in April might be even sharper," he told Japanese reporters, calling the rate of the drop in March "unprecedented".
The yen came under pressure in Asia on Wednesday after the trade data, weakening to 82.90 against the dollar from 82.57 yen in New York late Tuesday.
"As the data showed a clear picture of sluggish exports, the market moved to dollar buying against the yen," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.
"The data revealed a steep decline in automobile exports. As the supply chain damaged by the quake has not been restored yet, it is seen to take time until automobile exports will recover."
