Japan’s central bank says the world’s third-biggest economy is “picking up” as demand recovers in other countries and remains resilient at home, though the trade deficit widened last month, for the 10th straight month.
The Bank of Japan ended a policy meeting yesterday with no change to its strategy of doubling the monetary base to reach a 2 percent inflation target and jolt the economy out of two decades of stagnation.
That outcome was expected.
The central bank said in a statement, though, that there is a “high degree of uncertainty concerning Japan’s economy” and that prices show no signs yet of rebounding.
Japan’s economy grew 3.5 percent last quarter, but progress in increasing exports and boosting corporate investment and wages has lagged. A weakening in the yen linked to aggressive monetary easing has helped stabilize exports, which climbed 3.8 percent last month from a year earlier, but it is also accentuating rising import costs.
The trade deficit jumped nearly 70 percent over a year earlier to ￥879.9 billion (US$8.6 billion) last month, according to preliminary figures reported yesteray by the Japanese Ministry of Finance.
The trade deficit ballooned to a record US$83.4 billion in the fiscal year that ended in March, as imports climbed and a surge in exports to the US failed to offset the impact from territorial tensions with China and weak demand from crisis-stricken Europe.
Last month, exports totaled ￥5.78 trillion, but their increase was dwarfed by a 9.4 percent jump in imports, to ￥6.66 trillion.
The yen has slid in value by more than 20 percent against the US dollar and euro, in turn pushing up other currencies in relative value. That has raised costs for imports of crude oil, gas and other commodities for this resource-scarce nation.
The cost of oil imports slipped as crude oil prices moderated last month, but the value of imports of liquefied natural gas jumped 18 percent from a year earlier.
Japan’s demand for natural gas has ballooned since most of its nuclear power plants remain closed following the March 2011 accident at the Fukushima Dai-ichi nuclear power plant.
The deterioration in the trade balance is adding to pressure from the pro-nuclear government to restart more plants.
The US remained Japan’s biggest export market last month, as shipments rose 15 percent to ￥1.1 trillion, while imports edged up less than 1 percent to ￥534 billion, leaving a surplus in of ￥563 billion.
The deficit with China rose 60 percent to ￥442 billion as exports edged slightly higher from a year earlier to ￥998.4 billion, while imports surged 13.3 percent to ￥1.44 trillion. Exports to the EU fell 3.5 percent.