Japan posted a record-high trade deficit last month after its nuclear crisis shut down nearly all the nation’s reactors for tougher checks, sending fuel imports surging. Exports were hurt by a strong yen and weak demand.
The ￥1.48 trillion (US$18.7 billion) deficit reported yesterday highlights Japan’s increased dependence on imported fuel after the earthquake and tsunami on March 11 last year sent the Fukushima Dai-ichi nuclear power plant into multiple meltdowns.
As public worries grew, nearly all the 54 nuclear reactors in Japan were stopped for inspections. Now, Japan is importing more natural gas and oil as utilities boost non-nuclear power generation. Imports of natural gas last month vaulted 74 percent from a year earlier and imports of petroleum jumped nearly 13 percent.
Increased energy imports contributed to Japan last year recording its first annual trade deficit since 1980. Analysts have said Japan may return to a trade surplus in 2013.
There was bad news for Japan’s manufacturing powerhouses, with a strong yen and sluggish global economy contributing to slowing exports.
Exports declined 9.3 percent last month from a year earlier, particularly in computer chips and electronic parts. Imports last month grew 9.8 percent.
Japan’s trade deficit was the biggest for any month in the more than three decades since officials began compiling such figures in 1979.
Standard & Poor’s warned yesterday it could lower Japan’s sovereign rating if the economy expands less than expected or if public debt continues to grow, as the country’s unpopular government struggles to win support for higher taxes.
The ratings agency affirmed its “AA-” rating on Japan with a negative outlook, but also warned that higher taxes would not solve the structural problems that push up Japan’s welfare spending and increasingly pressure state coffers.
Japan’s debt burden is the worst among industrialized economies and it may not be able to postpone drastic spending cuts and aggressive tax hikes much longer as Europe’s debt crisis threatens the global economy.
“We would also consider lowering the long- and short-term ratings if the government’s debt trajectory remains on its current course or begins to erode the nation’s external position,” S&P said in a statement. “On the other hand, we may revise the outlook to stable if the government were to implement robust and sustainable fiscal consolidation.”
Japan’s rating does draw support from its ample holdings of external assets in its foreign exchange reserves and its current account surplus, S&P added.
S&P and Fitch both rate Japan “AA-” with a negative outlook. Moody’s Investors Service ranks Japan at the same level, at “Aa3,” but has a stable outlook.
All three agencies rate Japan three notches below the top “AAA” rating.
Japan’s rating could fall if real GDP growth per capita drops below S&P’s forecast of 1.2 percent, according to the statement.