TOKYO – Japan’s trade deficit surged to a monthly record of 2.8 trillion yen ($27.4 billion) in January as imports jumped 25 per cent, underscoring the challenge the country faces in restoring export-driven growth.
A weakening in the Japanese yen over the past year has failed to boost exports as much as hoped while imports of oil and gas, food and other products have surged. Consumers and businesses are thought to be stepping up purchases ahead of an April 1 sales tax hike.
The Finance Ministry reported Thursday that exports rose 9.5 per cent from a year earlier to 5.25 trillion yen ($51.5 billion) while imports were 8.04 trillion yen ($78.8 billion).
The previous record monthly deficit was 1.63 trillion yen, in January 2013.
Exports have suffered, meanwhile, as global growth has remained sluggish, but should pick up as the recovery gains momentum, Marcel Thieliant of Capital Economics said in a commentary.
“But the monthly numbers may well look worse before they get better,” he said.
Japan’s deficit with China also surged, to a record 1.04 trillion yen ($10.2 billion), as imports jumped 34 per cent while exports climbed 13 per cent.
Imports have been rising relative to exports as Japanese manufacturers increasingly shift production overseas, to be closer to customers in fast-growing developing nations and to reduce their own costs, resulting in trade deficits with many neighbouring countries.
Exports to the U.S. climbed 22 per cent, to 1.02 trillion yen ($10 billion) while imports rose 26 per cent to 656.4 billion yen ($6.4 billion), leaving Japan with a surplus of 367.2 billion yen ($3.6 billion).
Japan’s large and growing reliance on imports of crude oil and gas, especially after its nuclear plants were closed following the March 2011 disaster in Fukushima, has vastly increased its import bill.
Energy imports have not risen significantly in volume terms over the past year, though they have surged in dollar value due to the weakness of the Japanese yen resulting from a flood of stimulus meant to jolt the economy out of its deflationary doldrums.
The volume of Japan’s crude oil imports from the Middle East was up 5 per cent in January from a year earlier, but their cost soared 28 per cent. Food import costs rose 14 per cent.
Exports of electrical machinery, semiconductors and vehicles contributed to the nearly 10 per cent increase in exports. But exports of cars fell 1.4 per cent in volume terms, despite rising 13 per cent in value.