Japan posted its first trade deficit in almost two years last month, officials said yesterday, amid rising commodity prices and weak demand for its exports ahead of China’s Lunar New Year holiday.
The finance ministry said exports, a key driver of Japan’s economy, rose just 1.4 percent last month — the 14th consecutive month of growth, but a well off the 13 percent on-year surge in December.
That came as instability in the Middle East and North Africa pushed the price of oil and other commodities up amid concerns supplies could be cut, sending resource-poor Japan’s import bill up 12.4 percent.
And analysts warned that with commodity prices looking set rise further Japan could see its cost of imports continue to grow.
The trade deficit for export-dependent Japan, which is struggling to revive its sagging economy, stood at ￥471.42 billion (US$5.7 billion), compared with forecasts for a ￥49.6 billion surplus.
Yesterday’s trade data showed Japan’s imports last month at ￥5.44 trillion as the country was forced to pay more for iron ore and petroleum products as well as oil.
Exports were ￥4.97 trillion, modestly higher than a year earlier, thanks partly to demand for steel and construction machinery.
“Exports to China grew by only 1 percent in January, compared with 20.1 percent in December,” a finance ministry official said.
“Overall exports, mainly to China and other parts of Asia where people celebrate the Lunar New Year holiday, slowed because of shipping adjustments,” he said of the lead-up to the holiday.
The economy, hit hard by the global downturn, is however broadly gathering steam as wider overseas demand remains strong, and officials predict the trade balance will swing back to black soon.
“The global economy has been recovering since late last year while a relatively lower yen is also helping Japanese exporters,” said Hiroshi Watanabe, economist at Daiwa Institute of Research.
However, Watanabe said the trade balance could be squeezed further in the coming months because of higher commodity prices, especially crude from the Middle East where Japan sources 90 percent of its oil.
“There are three main factors behind the surging commodity prices,” he said. “Emerging economies are expanding further. Speculative capital is also hiking prices due to monetary easing policies of the world’s major economies. Finally, the instability in the Middle East is pushing prices of oil and other resources higher.”
The Bank of Japan this week upgraded its view of the economy for the first time in nine months on accelerating global growth but kept its easy monetary policy in place due to persistent deflation.
Japan’s real GDP slipped an annualized 1.1 percent in the December quarter as expiring auto subsidies hit car sales, a new tobacco tax sapped cigarette demand and a strong yen hurt exports.
However, the contraction was smaller than expected, and there are hopes the economy will pick up this quarter.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to