Japan’s trade deficit narrowed sharply last year as tumbling oil prices took pressure off its soaring post-Fukushima energy import bill, official data showed yesterday, while autos led a pick-up in exports.
The deficit decline offered up some good news for Japanese Prime Minister Shinzo Abe as he struggles to stoke growth ahead of a test to his leadership in upper house elections this summer. Stronger demand in some key markets, including the US, and a sharply weaker yen boosted exports from the world’s third-largest economy, the finance ministry said.
The figures showed Japan recorded its fifth-straight annual trade deficit, but the latest figure narrowed by 78 percent from 2014 to ¥2.83 trillion (US$23.9 billion).
Photo: Reuters
Auto exports surged 10.3 percent from a year earlier, while the value of crude oil imports dropped 41.0 percent.
For last month alone, the nation saw a trade surplus of ¥140 billion, returning to the black for the first time in two months.
Japan remains highly dependent on energy imports to power the economy, but a big drop in oil prices over the summer has taken pressure off the cost of its energy needs.
The nation has kept most of its nuclear reactors closed since a tsunami and earthquake triggered meltdowns at the Fukushima Dai-ichi plant in 2011. The accident forced Japan to turn to expensive imported fossil fuels to keep the lights on, leading to a string of big trade deficits.
“The continued weakening in energy prices is exacerbating the fall in import prices,” Capital Economics analyst Marcel Thieliant said.
Abe has pushed to restart nuclear plants, backed by Japan’s business community, but the public is sharply divided with many opposed to returning to atomic power.
Several reactors have been restarted since the worst atomic accident in a generation.
“The resumption of nuclear power plants had only a very marginal impact on the 2015 trade statistics,” Sumitomo Mitsui Banking chief economist Junko Nishioka said.
“But if the Abe administration moves forward [on more restarts] in the near term, it would have … further impact toward reducing the trade deficit,” he added.
However, Nishioka warned that overseas demand, particularly in China, was at risk in the face of a struggling international economy.
“Given the market turmoil, it will likely dampen business confidence,” Nishioka said.
Falling oil prices have also depressed oil-related investment in the US, denting demand for Japanese construction machinery, SMBC Nikko Securities chief economist Junichi Makino said.
“Looking forward, automobile demand is expected to stay solid, while a pickup is expected for electronics,” Makino added. “But a downside risk remains with general machinery.”
The trade figures come as economists look to next month’s release of GDP figures for the final quarter of last year.
Revised data showed Japan’s economy grew a stronger-than-expected 0.3 percent in the July-September period, after initial estimates had showed a contraction.
Japan’s economy fell into a brief recession in 2014 after consumers tightened their belts as Tokyo hiked the nation’s consumption tax to help pay down a massive national debt.
That downturn spurred the Bank of Japan to sharply increase its massive asset-buying program — a cornerstone of Abenomics — effectively printing money to spur lending.
The bank holds a meeting this week with speculation rising that policymakers might unleash another round of easing to counter weakness in the economy.
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