Japan Press Weekly

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2012 April 18 - 24 [ECONOMY]

Japan suffers deficit of \4.4 trillion in foreign demand-led trade

The Financial Ministry on April 19 announced that Japan’s trade balance in FY2011 ran a deficit of 4.41 trillion yen, approaching the limit to Japan’s trade driven only by foreign demand.

Total annual exports decreased by 3.7% compared with the previous year partially due to the 3.11 disaster, the strong yen, and the world economic downturn. Imports, in contrast, increased by 11.6% due to a surge in imports of liquefied natural gas and crude oil for thermal power generation associated with the suspension of operations of many nuclear reactors after the Fukushima accident.

Large corporations in such industries as auto manufacture and electronics are leading Japanese exporters.

These manufacturers have focused efforts on increasing exports while gaining international competitiveness through wage restraints, replacement of full-time workers with low-paid part-timers, and subcontractor bullying. Meanwhile, the surplus in their income balance in FY2011 was 4 times more than 10 years ago. The income balance reflects the financial balance of their subsidiaries abroad, which means that they are making increased profits from overseas production.

Japan’s trade in FY2011 showed an unusual change brought about by the 3.11 debacle. Even taking this into account, Japan’s trade deficit of the record high of 4.41 trillion yen indicates that Japan’s dependence on external demand is reaching its limit.

If the government uses the trade deficit as an excuse to expand imports by accepting fierce corporate cost-cutting efforts, people’s standards of living will increasingly be lowered.

The government should pursue a balance between domestic and foreign demand in order to improve people’s livelihoods and achieve sustainable economic growth.