Japan posts record deficit for last year

SHORTFALL::Analysts say the data have not indicated the Japanese economy is regaining momentum, and that its trade deficit is ‘not a temporary, but a structural problem’


Fri, Apr 20, 2012 - Page 10

Japan yesterday posted a record trade deficit for fiscal 2011 as the quake-tsunami disaster and ensuing nuclear crisis sent car and electronics exports tumbling and energy imports soaring.

The country’s trade shortfall hit ¥4.410 trillion (US$54.2 billion) in the 12 months to last month, the finance ministry said, amid continuing worries about the recovery in the world’s third-largest economy.

Over the year, Japanese exports fell 3.7 percent to ¥65.282 trillion, while imports soared 11.6 percent to ¥69.692 trillion, as worries mount that the country will face energy shortages this summer.

All but one of its nuclear reactors were shuttered after the Fukushima Dai-ichi nuclear power plant disaster.

Driving the decline, electronic component exports fell 14.7 percent, followed by a 5.4 percent drop in vehicle shipments, with manufacturers’ supply chains severely disrupted by the quake and tsunami, as well as floods in Thailand, where several Japanese firms have plants.

In the same period, crude oil imports rose 21.9 percent, while liquefied natural gas orders shot up 52.2 percent as the country turned to thermal energy.

The latest figures represent Japan’s first fiscal-year deficit since a shortfall of nearly ¥765.0 billion in 2008 as the global financial crisis kicked in amid the collapse of Wall Street giant Lehman Brothers.

“At the time of the Lehman shock, foreign demand was just gone, dealing a blow to exports,” Daiwa Institute of Research economist Satoshi Osanai said. “This time around, however, the deficit largely stemmed from higher import costs of natural resources.”

Energy costs will likely continue to take a toll on the trade picture, but “deficits are expected to shrink as exports recover gradually,” Osanai said.

Trade with China and other emerging economies was likely to pick up, with solid demand from the US also providing support as the world’s biggest economy mounts a recovery, he said.

The European market, however, remained a concern with shipments down 3.6 percent in fiscal 2011 — reversing a 9.5 percent rise in the previous year — with exports of passenger cars, chemicals and steel products all falling.

“The European debt crisis has calmed down, but their economy is still sluggish. We should keep a cautious view toward Europe,” Osanai said.

The ministry also released yesterday showing a smaller-than--expected trade deficit of ¥82.6 billion last month.

However, analysts expressed little optimism over that figure, which came after an unexpected surplus in February.

The data “have yet to show confidence in a trend that [Japan’s exports] are clearly emerging from sluggishness,” SMBC Nikko Securities chief market economist Mari Iwashita told Dow Jones Newswires.

In a report, Credit Suisse said the deficit comes at a time when the global economy was mounting a recovery, which “indicates that the deterioration in Japanese trade conditions is not a temporary, but a structural problem.”

High prices for liquefied -natural gas and rising imports in a country beset by a rapidly aging population and shrinking manufacturing sector would likely generate trade deficits through this year, it added.