Japan’s heavy dependence on foreign demand to drive its economy has left it vulnerable to the current slowdown, which has sent sales of its key exports cars and televisions, as well as other goods, tumbling.
The country logged a trade deficit of 725.3 billion yen in the fiscal year through March, its first such shortfall since 1980, the finance ministry said.
The economy suffered its worst performance in almost 35 years in the last quarter of 2008, contracting at an annualised pace of 12.1 percent. Analysts warn that the first quarter of 2009 could be just as bad.
The downturn has inflicted heavy losses on iconic companies such as Toyota and Sony, prompting a wave of job cuts.
In March alone the trade surplus plunged 99 percent from a year earlier to 10.96 billion yen, the government said.
But financial markets are cautiously hopeful that the global economic downturn is easing, even if rising unemployment is making life tougher for many ordinary people.
Recent data in China have raised hopes that the Asian powerhouse may be enjoying an emerging recovery, helped by a huge stimulus package.
US President Barack Obama earlier this month said he sees “glimmers of hope” of an economic revival and his Federal Reserve chief Ben Bernanke detected “green shoots” of recovery.
Many independent forecasters, however, remain cautious about the prospects of a rapid recovery in the global economy, even if exports and factory output do stabilise at the current low levels.