Japan is suffering its worst year for exports since 2009, as Europe's debt crisis, China's slowdown in economic growth and a diplomatic dispute with Beijing hurts manufacturers and deepens the risk of a recession.
Shipments totalled 53.5 trillion yen (HK$5.1 trillion) for the year's first 10 months, down 2.3 per cent from the same period last year, according to data compiled by Bloomberg from Finance Ministry figures released in Tokyo yesterday.
The trade deficit so far this year is a record 5.3 trillion yen.
The hollowing out of Japan's export champions, highlighted by a cut in Panasonic's debt rating to one step above junk status by Moody's Investors Service this week, indicates the urgency of kindling domestic demand.
Japan's political parties are facing off before an election next month on how hard to press the central bank for more stimulus.
"There's no doubt that Japan's economy is already in a recession," Kiichi Murashima, chief economist at Citigroup in Tokyo, said.
"Political pressure for further monetary easing is building, and we expect the [Bank of Japan] to take additional measures in January."
The Nikkei-225 Index closed up 0.87 per cent, its fifth gain in six days amid speculation that the opposition Liberal Democratic Party will form the next government and push the central bank into increased stimulus that weakens the yen.
Exports fell last month for a fifth month, down 6.5 per cent from a year earlier and leaving a trade deficit of 549 billion yen, the Finance Ministry said.
Shipments to China, Japan's largest export market, fell 11.6 per cent as a territorial spat over islands in the East China Sea takes its toll on the US$340 billion trade relationship between Asia's two biggest economies.
Exports to the European Union fell 20.1 per cent year on year, while those to the US were up 3.1 per cent.
"The slump in exports will probably continue this quarter," Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance in Tokyo, said.
"China's economy probably hit a bottom in the July-September period, but its recovery may be limited this quarter, and there's no sign that Chinese consumers will stop boycotting Japanese cars."
Japan's motor vehicle exports to China fell 82 per cent year on year, the largest monthly drop since October 2001, the ministry said.