An unexpected trade deficit in October for Japan, thanks to a surge in expensive energy imports, such as LNG, while exports fell for the first time in three months.

Figures from the Japanese Ministry of Finance yesterday showed that exports fell 3.7% in October from a year earlier to Y5.513 trillion compared with economists' forecasts for a 1.7% fall, but imports jumped 17.9% to Y5.787 trillion.

As a result, the trade deficit was Y273.8 billion ($3.58 billion), the first in two months, surprising analysts who had forecast a small surplus.

It was down sharply from the $10.6 billion recorded in October of last year.

The European crisis was blamed for the fall in exports, but many analysts missed another important factor, the continuing impact of the Fukushima nuclear crisis which is reshaping Japanese energy imports.

As well the flooding in Thailand cut shipments of cars, car parts and electronics parts (Exports to Thailand fell 5.1% in October as a result), and the stronger yen continues to have an impact on exports volumes and prices.

The fall came after the Bank of Japan warned last week that Europe's debt crisis may undermine global growth, saying that it was already affecting emerging economies and Japan in various ways.

The fall in exports last month came after a 2.3% rise in the year to September and was the biggest drop since a 10.3% fall in May as Japanese companies (especially cars and electronics groups) cut production and exports in the wake of the March 11 disasters.

The fall in exports and trade deficit was seen as a warning sign that the European debt crisis and uncertainties over the US economy are cutting into global demand for Japan's key export markets.

Imports were up 12.1% in September, so the near 18% rise in October was significant especially the surging cost of energy imports, such as oil, LNG, and steaming coal.

The stronger yen should be reducing the cost of imports, so the rise in prices and volumes has been faster than the rise in the yen.

Driving that is the continuing disruption of the Fukushima crisis which has seen many of Japan's 54 nuclear power stations taken off line, or remain offline after being damaged in the March 11 quake.

That has seen Japanese power companies restart fossil fuel powered power stations.

That in turn has produced a sharp rise in imports of energy, which have come as oil prices rose in October, and spot LNG prices jumped 80% in the Japanese market.

Among imports, crude oil was up 33.4% and LNG rose 63.8%,

The data showed that exports to the US the European Union and China all fell in October compared with the same month last year.

The biggest fall came in exports to China, Japan's largest export market, which were down 7.7% from a year earlier.

It was the first fall in three months.

Japan suffered a trade deficit of 228.9 billion yen with China, a huge turnaround from the surplus of 45.9 billion yen in October of 2010.

With the European Union, the trade surplus dived 47.1%, and the trade surplus with the US dropped 14.5%.

And, even though Japan maintained a trade surplus with the European Union, a ministry official said the surplus with the EU was the lowest for the month of October since 1979.

And the fall in exports to Thailand is expected to have continued into November before easing next month.

Within specific sectors, exports of electric parts such as computer chips were down 20.8% and ships fell 32.4%. Besides the higher energy imports, telecommunications equipment shipments into Japan jumped 50.2%.

Car exports still posted a 6.1% rise in October after a rise of 4.9% in September despite the global economic slowdown.

Japan's economy grew 1.5% in the third quarter, from the second (and 6% annual) as the economy rebounded from the recession caused by the March disasters.

But with industrial production down 4% in September and looking weak for the rest of the year, the pace of that recovery will slow, with the euro crisis adding pressure as well.

The Bank of Japan kept monetary policy unchanged last week but lowered its outlook for the economy and warned about possible fallout from Europe's debt crisis, and the high yen.

For Australia, there's a silver lining in the figures as our trade balance with Japan continues to improve with a 10.6% rise in October to just under $3 billion.

Japanese exports to Australia 19.3% to around $1.9 billion as car shipments continue to recover from the disruptions of earlier in the year.

Australian exports rose 14%, to around $4.8 billion, despite a weakening in iron ore and coking coal prices.

Higher prices for LNG and oil and oil products (such as LPG) drive the rise.

And Singapore warned yesterday that its economy is slowing.

The Ministry of Trade and Industry (MTI) said in a statement yesterday that it expects growth this year to be around 5%, but slow to a range of 1% to 3% in 2012 because of a slowdown in exports caused by the increasingly sluggish global economy.

The Singapore economy grew by 6.1% on a year-on-year basis in the third quarter of 2011, up from 1.0% in the preceding quarter.

On a seasonally-adjusted quarter-on-quarter annualised basis, the economy saw a small gain of 1.9% in the September quarter, following the 6.4% slump in the preceding quarter.

The department said. "For the last quarter of 2011, growth in the Singapore economy will likely weaken alongside deteriorating external macroeconomic conditions."

It said that next year, "although resilient domestic demand in emerging Asia will provide some support to global demand, it will not fully mitigate the effects of an economic slowdown in the advanced economies."

It warned that the growth forecast for 2012 " does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies.

"Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it said.