Japan was hit by more bad economic news yesterday as rising energy costs shaved the current account surplus and wholesale prices grew at their fastest pace in nearly three decades.
The data was released as Japan’s ruling Liberal Democratic Party launched a race to pick the next prime minister, with the health of the world’s second-largest economy emerging as the top issue.
With the cost of imports hitting a record high, the current account surplus fell 17.3 percent in July from a year ago to ¥1.53 trillion (US$14.29 billion), the finance ministry said.
Analysts said that the figure clouded the prospect of Japan’s economy, which contracted in the second quarter, expanding anytime soon.
“Exports are losing luster as the global economy deteriorates, including in US and Europe — and not excluding Asia, which is showing signs it is flagging,” Dai-Ichi Life Research Institute senior economist Toshihiro Nagahama told Dow Jones Newswires.
“The weak trend of exports is set to continue with the world’s economy expected to worsen even more. Japan’s economic weakness is probably here to stay until at least the end of the current fiscal year,” he said.
The trade surplus fell 69.8 percent to ¥232.2 billion. Japan’s exports rose 8.7 percent to ¥7.29 trillion, but imports jumped 18.9 percent to a record-high ¥7.06 trillion, the finance ministry said.
The value of imports was inflated by the rising cost of energy in Japan, which has virtually no fossil fuel resources on its own.
Crude oil imports rose 69.2 percent to ¥733.8 billion, coal imports more than doubled to ¥174.0 billion and liquid natural gas imports rose 59.3 percent to ¥155.0 billion.
The raw material prices have also triggered a spike in costs of merchandise for consumers — prompting worries about inflation in an economy that for the past decade had instead been battling against deflation.
Japan’s wholesale prices shot up 7.2 percent last month from a year earlier, growing at the fastest pace in 27 years on higher energy costs, central bank figures showed.
The figure was higher than market expectations of a 7.1 percent increase but a notch down from a revised 7.3 percent rise in the previous month, the Bank of Japan said.
It was the fastest-pace increase since an 8.1 percent rise in January 1981, when the country was reeling from the second oil crisis, the bank said.