


The data showed exports had risen 14.8% in the first 10 days of March before the quake struck, but fell 9.7% for the rest of the month.

"The effect of the earthquake can clearly be seen," a finance ministry official told a news conference, adding that production had stalled. "In particular, auto exports fell significantly, and as a result, overall exports decreased greatly."

Car exports declined 27.8% in March, the largest drop since October 2009, when it fell 37.2% due to lingering weak global demand brought on by the financial crisis of 2008, another official said.

The magnitude-9 quake and tsunami, which devastated northern Japan, damaged production facilities in the region and led to nationwide supply-chain problems. The March 11 disaster also triggered a crisis at a nuclear-power plant, causing power-supply shortages.

Economists said exports would be affected for some time by the prospect of continued stalled production, and some even forecast a trade deficit in the coming months, which would further slow the world's third-largest economy.

Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management, said Japan is expected to report a trade deficit in April and May, assuming import growth and export decline continue at the same pace as March.

"If Japan posts a trade deficit in April and May, the [gross domestic product] is also likely to contract in the April-June period," Mr. Takumori said, adding that he estimates the April trade balance to record a deficit of around ¥14.4 billion.

While Japan managed to retain a trade surplus in March, the surplus plummeted 78.9% from a year earlier to ¥196.5 billion, much smaller than expectations for a ¥645.4 billion surplus.

Imports rose 11.9% to ¥5.67 trillion, pushed up by high commodity prices, even though crude-oil import volumes declined by 6.6%. In February, imports were up 9.9% from a year earlier, to ¥4.935 trillion.

Exports to China were up 3.8%, while shipments to all Asian countries were flat, the ministry said. Exports to the U.S. fell 3.4%.

For the fiscal year ending in March, Japan's trade surplus stood at ¥5.392 trillion, up 3.9% from the previous year.

The trade data gave a small boost to the dollar against the yen, but the gains were limited, with the dollar back at previous levels.

"Falls in exports have been expected ever since the earthquake, and that idea was partly behind the yen's weakness against the dollar and the euro" after late March, said one dealer at a Japanese bank.

The prospect of a sharply reduced trade surplus for Japan is expected to ease the stubborn strength of the yen, which has continued to gain against other key currencies despite the effects of the earthquake. Analysts have said repatriation demands for the yen by big Japanese exporters has been a key factor behind its steady strength.

The poor results echoed other economic indicators in reflecting the impact of the earthquake, which has left more than 27,000 people dead or missing.

In its monthly economic report for April, the government last week downgraded its assessment for the economy for the first time in six months, prompting a government official to say that while the economy hadn't fallen into a recession, the recovery "is now a thing of the past."

Earlier this month, in one of the first official views of the economy since the disaster, the Economic Watchers survey of retailer and service-sector sentiment plunged to 27.7 in March, from 48.4 in February. The 27.7 figure is the lowest since February 2009, when the index stood at 19.4.