Japan’s trade deficit swelled to a record US$112 billion last year, official data showed yesterday, as the benefits of a cheap yen for the export-driven economy were diluted by soaring post-Fukushima energy bills.
The shortfall of ¥11.47 trillion (US$112 billion) marked the biggest deficit since comparable data started in 1979, according to the Japanese Ministry of Finance, with last month’s figure alone doubling from a year earlier.
Exports rose 9.5 percent to ¥69.79 trillion last year, their first increase in three years, but that was offset by a 15 percent jump in imports to their highest-ever level of ¥81.26 trillion.
Japanese imports of pricey fossil fuels have surged to plug an energy gap since the 2011 Fukushima Dai-ichi nuclear power plant crisis forced the shutdown of nuclear reactors that once supplied a third of the nation’s power.
At the same time that the yen has lost about a quarter of its value against the US dollar since late 2012 owing to a policy blitz by Japanese Prime Minister Shinzo Abe that meshes government spending with a program of central bank monetary easing.
However, while the weaker yen has boosted the bottom line at Japanese exporters such as Sony and Toyota, most have not slashed overseas prices to boost demand.
“Import volumes are also rising slightly faster than export volumes,” London-based Capital Economics said after the annual data was published.
It added that “there are no signs that the weak yen is raising the competitiveness of Japanese exports,” with the country’s share of global exports little changed despite the yen’s plunge against the US dollar.
“A major reason is that exporters have been reluctant to lower export prices,” Capital Economics said.
Shipments to China rose 9.7 percent, while those to the key US and European markets also improved.
Taro Saito, senior economist at NLI Research Institute, said that he expected Japan’s trade deficit to “continue for quite some time.”
When the yen was trading at about 80 to the US dollar in recent years, many firms shifted production away from Japan to cheaper bases overseas, a move that has diluted the benefits of a now-cheap yen for Japanese exporters, Saito said.
The unit has weakened to more than 100 against the US dollar, well down from the middle 70 levels in late 2012.
“Fundamentally it is getting difficult for Japan to boost exports because companies have shifted a lot of their production to foreign countries,” Saito added.
“So, the equation of a cheaper yen equalling a rise in exports in not very true anymore,” he added.
Japan has seen a mixed bag of data recently, but the government’s efforts to boost the economy appear to be taking hold.
Growth in the first half of last year outstripped other G7 nations, although that pace slowed in the third quarter, while inflation data in November last year suggested the Bank of Japan was getting closer to its goal of reaching sustained inflation of 2 percent within two years.
Last week, Bank of Japan Governor Haruhiko Kuroda said its monetary easing blitz was winning the war on deflation as policymakers held off announcing any fresh measures to stimulate the economy.
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