Japan records exports drop of 2.5%
Japan has reported its biggest half-year trade deficit ever as exports weakened and fuel imports soared to keep the power on while most reactors are idled in the aftermath of last year's nuclear crisis.
The Japanese Ministry of Finance reported a 2.9 trillion yen (£24.1 billion) trade deficit for the first half ended June 30. The deficit was triple the size of the deficit reported for the same period last year. First half exports fell 2.5% from last year while imports surged 13.1%.
The latest trade deficit is the biggest since Japan started compiling such records in 1979. Until this month, all 50 of Japan's working nuclear reactors were offline after the nuclear crisis set off in March 2011 by a massive earthquake and tsunami. Two reactors are now back online but the country still must rely more on oil and gas to supply electricity.
Exports were dented by weaker demand stemming from Europe's debt crisis. A strong yen also hurt exports. Disruptions to parts supplies caused by the disaster in north-eastern Japan have also hurt exports as production of cars and electronics slowed, although have since recovered.
Meanwhile, the International Monetary Fund (IMF) said China has achieved a "soft landing" in its economic slowdown, but cautioned that more sweeping reforms are needed to ensure healthy growth in the longer term.
In a report on its website, the IMF praised China's leaders for adjusting policies to help counter the malaise plaguing the global economy that has also slowed robust growth in China and other emerging nations.
"China's economy seems to be undergoing a soft landing, though global headwinds are increasing," said the report, issued after IMF consultations with Beijing.
It notes that China has reduced some imbalances in the world's second-biggest economy, such as its once huge trade surplus, and brought inflation under control. But it pointed to risks from excessive bank lending and urged more effective regulation to ensure financial stability.
China's second-quarter growth fell to a three-year low of 7.6% as exports, consumer spending and factory output weakened. Analysts say a rebound might begin in the second half but could take longer to take root and be weaker than previously expected.
That has dampened hopes it might make up for weak Western demand and drive global growth. Just a week earlier, the IMF had cut its 2012 growth forecast