Japan Posts Record Monthly Trade Deficit

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The FINANCIAL — Japan's economy got off to a bad start this year, posting a record Y1.475 trillion merchandise trade deficit in January as a global economic slowdown and the strong yen hurt exports and fuel imports continued to increase.


The data released Monday from the Ministry of Finance underline the persistent headwinds facing a resource-poor, export-reliant economy. The yen's strength and Europe's debt crisis hurt demand for Japanese products, particularly in Asia, while Japan needs more foreign fuel to generate power as many domestic nuclear power plants have remained idle since last March's earthquake and tsunami.

According to Borsa Italiana – London Stock Exchange Group, some economists now expect that Japan is headed for a second straight yearly trade deficit in 2012. Any economic rebound in the January-March period after the surprisingly weak 2.3% annualized contraction in October-December would be mild at best, they said.


The deficit largely matched the forecast of economists polled by Dow Jones Newswires and the Nikkei, but eclipsed the previous record of Y967.9 billion in January 2009, at the height of the global financial crisis. The figure was also three times the level of the same month last year. Such data in the current format go back to January 1979.

Japan's exports fell 9.3% on year to Y4.51 trillion, the fourth straight month of decline, as demand for semiconductors and steel weakened, the ministry said.

Even considering the global economic slowdown and the impact of the Lunar New Year holidays, trade with Asian nations was weaker than expected, said Takahide Kiuchi, chief economist at Nomura Securities.

Exports to China fell 20.1% on year, the largest drop since a 27.6% decrease in August 2009, the ministry said. Japan's trade deficit with China came to a record Y587.9 billion. Exports to Asia overall declined 13.7%, the sharpest since a 15.0% contraction in October 2009.

But exports to the U.S. rose 0.6% on year, the third straight monthly rise, due to more shipments of cars and construction machinery, the data showed.

Meanwhile, imports of liquid natural gas, crude oil and coal helped push overall imports up 9.8% to Y5.985 trillion, the data showed. It was the 25th straight month of growth.



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