Tokyo, 25 July 2008. Japan’s exports have fallen for the first time in five years among further sides of a quickening global slowdown.

Exports in June fell 1.7% from a year earlier, the first month that has recorded an annual drop since 2003. Lead the decline were the US, which fell 15% year-on-year, and Europe, down 11%. Although these trends were expected, they were somewhat larger than expected. There had been hope that exports to Asia, in particular to China, would help pick up the slack, but these exports rose by only 1.5%. China exports grew at 5.1%, down from 23% a year earlier.

High commodity prices have also pushed up import figures. Japan’s June 2008 imports stood at 7.2 trillion yen, a monthly record. The trade surplus has dropped a harsh 89% from a year earlier to 139 billion yen, $1.28 billion at today’s exchange rates. This is the fourth consecutive month that goods-trade figures have dropped.

These are worrying developments for Japan. It domestic market has been pretty quiet – economic growth over the last five years has been driven by exports. The world’s second largest economy is likely to face a challenging few years with slowing exports, rising costs, anemic consumer growth and low business confidence all taking their toll.

These figures suggest theories of Asia ‘de-coupling’ from the west have been overstated, although they are reducing the extent of their dependency.

Mayumi Harouki, EconomyWatch.com