Japan's trade at 19-year low

JAPAN'S trade surplus last year plunged to its lowest since 1983 as falling exports sliced it by 38%, the steepest fall in 31 years. A 5% year-on-year drop in exports took the surplus down to 6.6 trillion yen (£35bn), as the slump in key US, European and Asian markets saw demand for electronic goods and computer components dry up.

The 13% reduction in the value of the yen against the US dollar last year failed to rebuild demand in December, when the surplus shrank to 481.4bn yen from November's 570bn.

Exports by volume and value to the United States fell by 20% during the month. The biggest decline was suffered by electronic components although motor car sales were boosted by massive price-cutting campaigns in the wake of the 11 September terrorist attacks on the US. Over the year, Japan's exports of semiconductors and other electronic equipment were down more than 20%, and computer makers' overseas sales dropped by almost 9%.

The yen's fall helped reduce the trade surplus by raising the value of imports, which were up 3.6%, although slowing consumer demand meant volumes fell during the last quarter of the year.

Today's figures, which showed that the falling yen had little effect on boosting exports and solving Japan's economic problems, reinforced Wednesday's warning from US Treasury Secretary Paul O'Neill, who said in Tokyo that the only solution was to tackle Japan's fundamental problems, including the mountain of bad debts.