Japan logged its worst-ever monthly trade deficit last month despite an upturn in exports as the yen’s recent sharp drop pushed fuel costs higher, official data showed yesterday.
The world’s third-biggest economy is mired in recession and a mood of optimism in the stock market and among analysts has so far failed to translate into good macroeconomic figures. The finance ministry data showed Japan suffered a shortfall of ￥1.63 trillion (US$17.4 billion) last month, the worst deficit on record for a single month, exceeding the previous record of ￥1.48 trillion for the same month last year.
Comparable data began in 1979. Japan tends to post bad trade figures in January, with exports stalling because of the New Year holidays.
Economists on average had expected a shortfall of ￥1.3 trillion.
Taro Saito of the NLI Research Institute said the deficit did appear “a lot worse than I had expected.”
“Overall, you can’t make the deficit go away that easily,” Saito told Dow Jones Newswires, adding that Japan would likely see deficits over the coming months.
Exports last month increased 6.4 percent from a year earlier to ￥4.8 trillion, the first rise in eight months on higher shipments of automobile parts and other items.
However, imports rose 7.3 percent to ￥6.43 trillion, boosted by heavier bills for petroleum products, natural liquefied gas and crude oil.
Japan’s fuel imports have risen since the 2011 earthquake and tsunami disaster sparked the world’s worst nuclear accident in a generation, sending most atomic power plants offline.
However, the cost of imported fuel, which is denominated in US dollars, has risen for Japan as the yen has tumbled over the past few months, driven by expectations of aggressive monetary easing under Japanese Prime Minister Shinzo Abe.
The US dollar’s average rate last month was ￥86.93 against ￥77.33 a year earlier, according to customs data, meaning the yen was 12.4 percent cheaper.
A lower yen is good for Japanese exporters, but there have been accusations in recent weeks, particularly in Europe, that Tokyo is deliberately trying to manipulate currency rates.
“The huge deficit at the beginning of the year is, as we expect, likely to result in the annual trade balance remaining in deficit for the third straight year in 2013,” Credit Agricole economist Yoshiro Sato said.
However, the latter half of the year is likely to see a narrowing deficit on the back of a recovery in global demand, he said.
Analysts had expected a boost in exports last month due to the yen’s sharp decline and a recovery in trade with China.
Exports to China rose 3 percent last month with emotions over a territorial dispute easing. The row sparked huge anti-Japan protests across China and a consumer boycott.
US-bound exports soared 10.9 percent on strong shipments of automobiles and their parts. Exports to the EU fell 4.5 percent, narrower than double-digit plunges in past months.