Japan trade hit by Europe crisis, China tensions

Associated Press Modified: October 22, 2012 at 12:45 am •  Published: October 22, 2012

TOKYO (AP) — Japan's trade deficit widened in September as exports plunged 10.3 percent from a year earlier, weighed down by Europe's debt crisis and a surge in antagonisms with China that have damaged close economic ties.

The deficit for the month was 558.6 billion yen ($7.2 billion), the Finance Ministry said Monday, higher than the forecasts of many analysts and bigger than a deficit of about $3.7 billion a year earlier. The deficit in August was $9.6 billion.

The world's third-largest economy is "leveling off," central bank governor Masaaki Shirakawa told a quarterly meeting of the bank's regional managers. He warned that the risk of shocks to the financial system from the debt crisis in Europe remains high and slowing global growth is hitting manufacturing and exports.

With the risk of recession rising, the Bank of Japan needs to convince markets that it will do anything necessary to pull the economy out of its two-decade old malaise, said Matthew Circosta, an economist with Moody's Analytics in Sydney, Australia.

Instead of sporadic monetary easing, "they need to make it sustained and powerful," he said. "They've just got to be more aggressive than they are now."

Many expect the central bank to opt for further easing soon, perhaps as early as the next board meeting, on Oct. 30.

September's exports totaled 5.4 trillion yen ($68.7 billion). Imports rose 4 percent from a year earlier to 5.9 trillion yen ($75.9 billion), inflated by additional imports of oil and other fuels for power generation as most nuclear reactors remain offline in the aftermath of last year's Fukushima nuclear disaster.

So far, Japan's trade deficit for 2012, according to the ministry's provisional figures, is about 4.73 trillion yen ($60.6 billion).

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