Japan's exports tumbled in July at the fastest pace since the global financial crisis with a resurgent yen adding to the challenge of weak external markets. As Sonia Legg reports, it's left the economy and the government more reliant on shaky domestic demand to drive growth.
It was a double whammy for Japan's exports in July. A resurgent yen and weakness in overseas economies meant they fell 14 percent from the previous year - the fastest drop since the global financial crisis. Imports too were down - by almost 25 percent. (SOUNDBITE) (Japanese) GENERAL MANAGER OF GAITAME.COM, A FINANCIAL FUTURES TRADING FIRM, TAKUYA KANDA, SAYING: "With both exports and imports falling, and imports facing a bigger fall it's not very good for the Japanese economy, because it means that trade is shrinking," Japan's exports have now fallen for 10 consecutive months. Shipments of cars to the U.S., ships to Central America and steel to Italy were all down As were exports to China - Japan's largest trading partner. They fell 12.7 percent, extending June's 10 percent decline. The central bank is trying to help with stimulus. But the yen has put a spanner in the works - it's risen 20 percent versus the dollar so far this year. And it's a vicious cycle. SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING: "The concern I have is that the policy arrangement is not joined up enough - they are not working in sync all together to support each other. Monetary policy is stop and go, sometimes very timid, sometimes very powerful. The fiscal stimulus is all about to aid and support structural reform, traditional pump-priming hasn't work." Another worry is a fall in oil and kerosene imports in July, confirming what Japan already knows Industry isn't using as much of it because output is weak. In fact Japan's economy in the second quarter ground to a halt.