Japan’s Trade Deficit Problems: A Signal About Global Recovery

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Japanese government officials say that they may be seeing a slowing in the bad trend for the nation’s imports and exports. That does not mean much. The March figures were especially poor. Exports fell by 46% from the same month last year.

Since Japan is the world’s second largest economy by GDP, if it is seeing such a rapid drop in exports, the countries on the other side of that equation are not showing signs of recovery either. Those countries include the US, UK, and China.

Since Japan relies so heavily on exports, it is not a bad proxy for global business and consumer demand, especially if its results are taken with those from China. Since both countries are posting  what may be record drops in their business from abroad, it is another clear sign that the recessions in most large nations are not leveling off. In fact, they are picking up speed, at least as of last month.

Japan cannot export what the world won’t buy and the world is not buying much.

Douglas A. McIntyre