Japan posted a US$9.6 billion trade deficit for last month as shipments to Europe and Asian countries sank, further undermining hopes for an export-driven revival in the world’s third-biggest economy.
The ￥754.1 billion (US$9.6 billion) deficit last month was not much smaller than the US$9.9 billion deficit reported a year earlier, the Japanese Finance Ministry reported yesterday. Exports last month totaled ￥5.05 trillion, down 5.8 percent from a year earlier, while imports fell 5.4 percent to ￥5.8 trillion.
The strong Japanese yen has bit into exports while demand has evaporated in crisis-stricken Europe.
Meanwhile, the country’s energy imports have risen following closures of most of its nuclear plants. Japan’s central bank, which on Wednesday announced it would boost the size and duration of a government bond-buying program to spur growth, forecast little change in the immediate future.
“Exports and industrial production are expected to remain relatively weak for the time being,” the Bank of Japan said in its monthly report, released yesterday.
Japan has eked out small trade surpluses in some months this year but reported a record annual trade deficit for the fiscal year that ended in March.
Though the deficit for last month was lower than the more than ￥800 billion that some analysts had forecast, prolonged weakness in Europe and recent friction with China, Japan’s biggest overseas market, suggest the trade gap will likely persist in coming months.
Exports to Europe dived 28 percent last month from a year earlier to ￥484.9 billion while exports to Asia — Japan’s biggest overseas market — sank 6.7 percent overall to ￥2.84 trillion.
Even before a recent territorial dispute flared, sparking anti-Japanese riots across China, exports were weakening. They fell 9.9 percent from a year earlier to ￥966.3 billion, the Japanese Finance Ministry reported.
The central bank’s bond-buying program is meant to encourage borrowing and spending and make Japan’s exports more competitive, while also exerting downward pressure on interest rates and on the yen.
The central bank acknowledged that Japan’s economic rebound had stalled, but predicted it would return to a “moderate” recovery path in the longer term. Its report cited resilient domestic demand thanks to reconstruction in northeastern regions devastated by a tsunami in March last year and earthquake and signs of quickening activity in the housing sector.
Central banks already have pushed short-term rates nearly as low as possible. That leaves government bond purchases as one of their few remaining tools, though their impact appears limited.
The Japanese yen weakened on Wednesday to ￥79.17 per US dollar by mid-afternoon, but by yesterday afternoon it had rebounded, trading at ￥78.09 per US dollar.