More Bad Economic News From Japan
Japan’s Finance Ministry has released trade figures for August, and is spinning a massive contraction in exports as “good” news. Well, perhaps Tokyo believes the latest data is evidence of good news, as imports declined even more, creating a modest trade surplus. However, the reality both figures present is that global trade remains weak, hardly an auspicious indicator of an end to the global economic crisis.
In August, Japan’s exports declined by 36% from August of 2008. Looking at the export figures in detail, shipments to the United States declined by 34.4%; to China by 27.6% and to the European Union by 45.9%. In spite of the clear collapse of Japan’s export machine, Tokyo still reported GDP growth in the last quarter, evidence that the recession has ended in Japan, or so the Finance Ministry would lead one to believe. However, those GDP growth figures only exist due to massive pump-priming by the government, which presides over the largest sovereign debt in the world, measured as a proportion of GDP.
In other negative signs that Japan’s economy remains moribund, the nation’s largest air carrier, Japan Airlines, in on the verge of bankruptcy. JAL is on its knees, appealing to the new government in Tokyo to provide a bailout. It will be interesting to see if the new political power center in Tokyo will abide by its campaign promise to restrict corporate welfare in exchange for more public welfare, or cave in to the prospect of a major corporate failure.