Japan's recession woes deepened as a record plunge in exports added to fears that Asia's largest economy is becoming one of the biggest victims of the global crisis.
Japan's reliance on foreign markets to drive its recovery from a decade-long slump has left it particularly vulnerable to the global economic downturn, which has crushed demand for its cars, televisions and high-tech goods.
The trade deficit ballooned to an unprecedented 952.6 billion yen ($9.9 billion) in January as exports plunged 45.7% from a year earlier, the finance ministry reported.
It was the worst month since comparable records began in 1979, marking a dramatic shift in fortunes for Japan's economy, which used to enjoy large surpluses thanks to brisk demand for its high-tech products.
Once seen as relatively immune to the global downturn, Japan's economy has become one of the worst affected, exposing the fragility of its export-led rebound after the 1990s recession.
'Japan is particularly vulnerable to this downturn because trade is so central to the economy,' World Trade Organisation chief Pascal Lamy said on a visit to Tokyo.
Analysts expect Japan to report Friday a record 10% drop in factory output in January from the previous month. Unemployment is also forecast to rise as corporate icons such as Sony and Toyota slash thousands of jobs.
Demand for Japanese exports has been crushed by a slump in worldwide consumer spending, pushing the world's second largest economy into its worst recession in decades.
A surging yen has added to exporters' troubles, making it harder for them to remain competitive. Japanese exports to the US, the European Union area and even the once-resilient Chinese economy roughly halved in January. Car exports plunged more than two-thirds as car makers idled plants in response to slumping sales.
Few analysts are optimistic about the chances of a significant rebound in Japanese shipments any time soon.
The government said last week that Japan's economy was in the deepest crisis since World War II, after contracting at an annualised pace of 12.7% in the last quarter of 2008, the worst performance in almost 35 years.
Japan's unemployment rate rose to a near three-year high of 4.4% in December and looks likely to top the post-World War II peak of 5.5% later this year, analysts said.
