TOKYO (AP) -- The severe slump in Japan's exports eased slightly in March, offering a small sign that overseas demand may be headed toward recovery, even as the nation recorded its first annual trade deficit in 28 years.
Exports in March plunged by almost 46 percent from a year earlier, the finance ministry said Wednesday, but the decline wasn't as bad as February when exports slumped by about half. Moreover, month-on-month data show that exports managed a 2 percent rise -- the first uptick in nearly a year.
Shipments to the country's two biggest markets, the U.S. and Asia, posted slower retreats, while those to the European Union fell more steeply.
A rebound in exports is critical to reviving the world's second-largest economy as well as the rest of Asia. Japan, which had relied heavily on foreign sales of its cars and gadgets to drive growth, has been dragged into its steepest recession since World War II by the unprecedented collapse in global demand.
Wednesday's data supports what many economists are beginning to say: the eye of the storm may have passed.
"Trade data for March suggest that Japanese exports may have already hit bottom," said Credit Suisse economist Hiromichi Shirakawa in Tokyo. "Sentiment among global manufacturers appears to have taken a turn for the better over the past few months."
Shirakawa forecasts exports to rebound from May, but based on the government's latest trade data, they may turn up slightly sooner than previously projected, he said in a report.
Exports in March were down 45.6 percent from a year earlier to 4.18 trillion yen ($42.4 billion), dragged particularly by continued lackluster demand for cars, electronics and machinery. Imports fell 36.7 percent to 4.17 trillion yen, resulting in an unexpected trade surplus of 11 billion yen.
For the business year through March 31, Japan recorded its first annual trade deficit in 28 years, the Ministry of Finance said.
Exports to the U.S. fell 51.4 percent in March from a year earlier, easing from February's 58 percent decline. Shipments to Asia slumped 39.5 percent, an improvement from a 46.3 percent fall the previous month.
Japan's exports to the EU, however, tumbled 56.1 percent from 54.7 in February.
Finance Minister Kaoru Yosano said the results were alarming. "All of us -- the people, politicians and the government -- should take the numbers seriously."
"We need to find out if made-in-Japan products and services are still staying competitive internationally," he said.
Yosano said this week that the government planned to submit a record extra budget to finance a new stimulus package that calls for a record 15.4 trillion yen ($157 billion) in spending to lift the economy out of the recession.
AP Writer Mari Yamaguchi contributed to this report.