The country's exports plunged 10.3pc in September from a year ago, dimming hopes of rapid recovery in the Far East. Exports to Europe crashed 21pc. Shipments to China fell 14pc as the Diaoyu-Senkaku islands dispute led to a slump in car sales. Honda, Mazda, and Nissan all saw sales plunge near 30pc as Chinese consumers boycotted Japanese brands. Nomura said the export slump will push country into full recession.
Stephen Jen from SLJ Macro Partners said the global storm is drifting eastwards into Asia, opening a "third chapter" of the crisis that will last well into 2013. "Many analysts have declared that the low in the global economic cycle is in place. We are not convinced," he said, prediticting a rise in currency protectionism.
Japan is the awakening giant in this conflict. The yen has risen 30pc against China's yuan, 65pc against the euro, and 80pc against Sterling since 2008. Tokyo is itching to fight back.
Yen strength is Japan's curse. It rises on safe-haven flows during global downturns, choking the economy. This stems from Japan's bitter-sweet role as top creditor with $3 trillion of net assets.
Hans Redeker from Morgan Stanley says this pattern may soon change as political upheaval in Tokyo and surging public debt of 245pc of GDP usher in an era of devaluation.
BBC
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