September 28, 2020

Quake Takes Toll on Japan Exports in March

The devastating earthquake and tsunami and the power shortages that followed struck Japan just as the economy, the largest after those of the United States and China, had begun to regain some momentum after the deep slump that followed the global financial crisis in 2008.

With the global recovery now on relatively solid ground, analysts and officials are optimistic that the Japanese economy will start to rebound by the second half of the year, if not sooner, as reconstruction spending kicks in and manufacturing and electricity supplies return to normal.

In the short term, however, the pain and uncertainty remain intense, and the trade statistics for March, released by the Japanese Finance Ministry on Wednesday, provided some of most concrete evidence available so far about the economic toll of the disaster.

Exports, which had seen more than a year of solid growth before the quake struck, fell 2.2 percent from the level of a year earlier, to ¥5.9 trillion, or $71 billion. The decline was more pronounced than some analysts had expected and represented a sharp turnaround from the robust rise of 9 percent recorded in February.

“It will take time for exports to recover to pre-earthquake levels, given that supply-chain disruptions and electricity shortages are hampering efforts to restore production,” Hiromichi Shirakawa, an economist at Credit Suisse in Tokyo, wrote in a research note Wednesday.

Mr. Shirakawa noted that the decline in exports in March had not been as bad as he had initially expected, in part because companies probably had exported goods in March that were in stock and had been produced before the disaster. “A sharp decline in production after the earthquake may have a larger impact on exports in April and May,” he added.

Imports rose 11.9 percent, to ¥5.7 trillion, making for a trade surplus of ¥196.5 billion, a drop of 78.9 percent.

The data Wednesday highlighted that the pain was especially acute in the automobile and electronics sectors.

Shipments of motor vehicles, which account for about 10 percent of total Japanese exports, slumped 22.1 percent from March 2010, as car manufacturers like Toyota and Honda had to cut production and idle plants in the weeks after the quake struck.

Many of these plants have restarted production again in the past week or two, but in many cases, operations remain below levels reached before the earthquake and dependent on whether, and how rapidly, the flow of components and spare parts returns to normal in the coming weeks and months.

Toyota, one of the companies hardest hit by the disruption, has resumed production at its plants in Japan, which build nearly half the vehicles the company sells worldwide. However, the factories are running at only 50 percent capacity, and Toyota operations in other parts of the world have also been scaled down significantly as inventories of parts and components dwindle.

On Wednesday, Toyota said production in China would be reduced to between 30 percent and 50 percent of normal until June 3.

On Tuesday, the company had said it would cut production at its plants in North America by 75 percent in the next six weeks to conserve its supply of parts. The plants involved build about 70 percent of the vehicles Toyota sells in North America. As a result, significantly fewer cars — including the Camry and Corolla sedans and the RAV4 crossover — will be available this spring, a prime selling season for the industry.

“This really just reinforces that consumers and dealers haven’t seen the full effects yet of the crisis in terms of inventory and vehicle availability,” said Rebecca Lindland, an analyst at the research firm IHS Automotive. “The impact will be felt for months to come since production is slowed into June. And there’s a good chance the production won’t suddenly bounce back to 100 percent on June 3.”

Honda, Nissan and Subaru have also trimmed their output in North America as they work to obtain adequate inventories of Japanese-made parts.

Toyota is more affected than other automakers because it builds a larger percentage of its vehicles in Japan. Its popular hybrid car, the Prius, and all but one model for its Lexus luxury brand are exported from Japan.

Economists stress, however, that the problems felt by the car sector do not extend to the Japanese economy as a whole. Activity in many other sectors was less directly affected by the March 11 events and have already returned to normal, said Takuji Okubo, chief Japan economist at Société Générale in Tokyo.

In addition, fears that power constraints may intensify once electricity demand picks up over the summer may be overstated, he said.

“Japanese manufacturers can probably manage the impact by shifting some activity to nighttime and weekends,” he said. “Consumption and manufacturing will probably decline, yes, but the effect is probably in the magnitude of 2 to 3 percent, rather than 5 to 6 percent.”

Nick Bunkley contributed reporting from Detroit.

Article source: http://feeds.nytimes.com/click.phdo?i=313c6a35794272da5b9c14718c2f367b

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