World recession weakens Japan's economy by cutting vital exports
The key prop of the Japanese economy - exports - is weakening.
Exports are the prime reason this resource-poor country has become economically rich. And recent gloomy trade figures, showing the steepest plunge in exports in six years, remind the Japanese that their prosperity depends heavily on demand for their goods from the rest of the world.
The February exports were $11.66 billion, still larger than many countries' trade figures for an entire year. But to the Japanese, the 3.7 percent decline is a clear indication the world economic recession is sapping the vitality of their economy.
What worries government officials and businessmen alike is the sluggish performance of former high-flyers like automobiles, cameras, tape recorders, and televisions.
The transformation has been rapid. In the first half of 1981 the export trade continued to expand. It suddenly came to a halt and by the end of the year it was in retreat.
''I think what worries the Japanese most,'' says one foreign economic analyst , ''is that events seem to be slipping out of their control.
''Because of trade friction they are exercising export restraint in some products to some major markets like the US and Europe. But the world recession is now pushing them further than private business would certainly want to go.''
The problem shows in several areas. Sales to Western Europe were down 3.5 percent in February. Those to the US grew only 7.1 percent, the first single-digit growth since September 1980.
Other reliable customers are not performing as the Japanese have come to expect. With their oil revenues down, countries like Iran and Nigeria have cut their spending.
Trading companies are deeply concerned about Indonesia, which until a few months ago was considered one of the brightest new stars on the horizon.
Indonesian orders for high-profit items like industrial plants have fallen off sharply as the country's oil sales dropped in volume and value (turning a $2 .8 billion current account surplus in 1980 into a billion-dollar deficit last year).
Exports to Mexico are also on the skids for oil-related reasons.
Only a handful of the oil-rich countries, like Saudi Arabia, remain active customers of Japan. ''It's getting increasingly difficult to determine which countries are promising long-term markets,'' laments a major trading company executive. ''It's going to play havoc with our corporate planning.''
Because of the shrinking exports and a domestic recession, many experts are worried about the prospects of the Japanese economy in the next year or so.
Fears of a loss of vitality are backed by an economic planning agency report that the gross national product declined in the final quarter of last year. Economists now concede there is no way economic growth in fiscal 1981 (ending March 31st) can even reach 3 percent. The government's original target was 5.6 percent.
Deeply involved in these developments is the poor performance of the yen against the dollar on world exchange markets.
The Japanese currency has weakened so much that suspicious Europeans have accused the government and Bank of Japan of manipulating it through a ''dirty float.'' Japanese officials heatedly deny this. They maintain, as they have for months, that the problem lies with the high US interest rates.
Although Japanese exports are declining, the trade gap with other nations isn't narrowing because imports are also down. A weak yen has pushed up domestic prices.
With neither domestic nor overseas markets offering much encouragement for Japanese business, top government and ruling Liberal Democratic Party officials have urged Prime Minister Zenko Suzuki to prepare a new economic stimulus package as soon as possible. Such measures have fared poorly in recent years.
Mr. Suzuki is hoping to jolt key industries like steel and construction into action by awarding public works contracts early in fiscal 1982. Officials also hint the prime minister may have to give up his political commitment to slash the chronic budgetary deficits if things don't get better soon.