The earthquake that shook Japan last year is not the only origin of the shock waves the country is now experiencing. The economic crisis has also shaken the Asian nation. During the first semester of the current fiscal year, the Japanese had a historic fall in exports, which in turn resulted in the largest fiscal deficit.
The financial crisis in the Euro zone and North America, greatly decreased the amount of products that Japan was able to send abroad which together with the costly imports of crude oil gave the island’s economy a double punch right on the face. The explosion and collapse of the nuclear reactors at the Fukushima complex not only caused the contamination of most of the food and water on the island, but also meant that Japan had to increase imports of oil to satisfy its energy needs.
In the period from April to September, the trade deficit in what is considered the third world economy, surged 90.1 percent year on year and stood at 3.22 trillion yen (31,200 million euros), the highest since 1979, when the Ministry of Finance began compiling the results of this indicator.
Behind this decline was the drop in exports, a pillar that supports about 40% of Japan’s gross domestic product and has been handicapped primarily by lower demand due to the global economic crisis. Japanese exports fell sharply especially in Europe, where they were down 16.1%, with significant losses in countries like the UK (-26.3%), Italy (-31.4%) and Germany (-11, 7%), and Japanese traditional sectors such as semiconductors, electronic devices or vehicles.
Japan posted its first trade deficit in this period with the European Union, which registered at 92,100 million yen (890 million euros), according to preliminary data released Tuesday. In the case of Spain, in the spotlight because of its debt crisis, Japan closed the fiscal semester with a trade deficit of 59.259 million yen (573 million euros), the result of a fall in exports of 19.3%, while imports increased by 13.7%.
To this scenario, Japan had to add the difficult situation with China, which is Japan’s largest trading partner. The two countries began a territorial dispute that resulted in the worst bilateral tension in years and is reflected in the decline in demand for Japanese products in the Chinese mainland.
In the first six months of the current fiscal year, exports from Japan to the second largest economy contracted by 8.2% over the same period last year, while imports rose 2%. The consequence was a growing deficit of 1, 53 trillion yen (14,800 million euros). The drop was even more pronounced in the month of September, when the conflict with China escalated and there was a wave of demonstrations against Japan all over China. Some protestors even attacked Japanese-owned companies.
Sales for that month, which originated in Japan, suffered a setback of 14.1%, while imports increased by 3.8% over the same month of 2011. The general decline in Japanese exports was also influenced by the strengthening of the yen, which is seen by many investors as a refuge in times of economic uncertainty. The value of the Yen caused Japanese manufacturers to get a smaller return for their products.
The slowdown in exports stopped Japan’s economic recovery after the setback at the devastating tsunami and nuclear accident in March 2011. Imports from Japan increased between April and September by 2.6% year on year to 35.38 trillion yen (EUR 342.537 million), largely due to an increase of almost 10% on the purchase of energy resources.
Japan used to get around 30% of its power from nuclear plants, but after the Fukushima explosion, and with nearly all of its nuclear plants out of service, the country had to buy more oil to power up its thermal power plants. Crude oil imports increased by 8.3% in the first half of the fiscal year, while purchases of liquefied natural went to 24.3%.
Unfortunately, the crisis is all but ending for Japan. New reports as recent as last week, state that Unit 4 from the Fukushima Nuclear Complex, which currently holds more than 1,500 nuclear fuel rods, is near complete collapse. If the total decimation of the nuclear reactor is completed, the deadly radiation would make it imperative to evacuate the whole island. The amount of radiation could be so serious, that it could make much of the world completely uninhabitable.
As reported on NaturalNews.com:
“According to the Secretary of former Japanese Prime Minister Naoto Kan, the ground beneath Unit 4 has already sunk by about 31.5 inches since the disaster, and this sinking has taken place unevenly. If the ground continues to sink, which it is expected to, or if another earthquake of even as low as a magnitude six occurs in the region, the entire structure could collapse, which would fully drain the cooling pool and cause a catastrophic meltdown.”
As it turns out, Japan’s economic problems are not necessarily what is attracting the attention of the country and the rest of the world.
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Contributed by Luis Miranda of The Real Agenda.
Luis R. Miranda is the Founder and Editor of The Real Agenda. His 16 years of experience in Journalism include television, radio, print and Internet news. Luis obtained his Journalism degree from Universidad Latina de Costa Rica, where he graduated in Mass Media Communication in 1998. He also holds a Bachelor’s Degree in Broadcasting from Montclair State University in New Jersey. Among his most distinguished interviews are: Costa Rican President Jose Maria Figueres and James Hansen from NASA Space Goddard Institute.