Japan trade deficit swells 25 per cent in August as imports outpace growth in exports
Sep 19, 2013 / 12:50 pm
TOKYO - Japan's trade deficit swelled to a larger-than-forecast 960.3 billion yen ($9.8 billion) in August, the 14th straight month of red ink, as imports outpaced growth in exports, customs data showed Thursday.
Boosted by higher fuel costs, imports rose 16 per cent from a year earlier to 6.74 trillion yen ($68.7 billion) while exports climbed 14.7 per cent to 5.78 trillion yen ($58.9 billion). The deficit was a quarter bigger than the 768.4 billion yen gap seen in August 2012.
In surplus for years, Japan's trade account fell into deficit after the March 2011 earthquake and tsunami on Japan's northeastern coast caused meltdowns at the Fukushima Dai-ichi nuclear power plant. With all nuclear plants offline for safety checks or maintenance, imports of crude oil and natural gas have soared.
Costs of imported fuel, which comprise more than a third of all imports, rose nearly 18 per cent in August, despite a slight decline in volume.
The value of total imports of food, raw materials and manufactured goods also rose at a double-digit pace from the same month a year earlier, while import volumes of most declined.
Ultra-easy monetary policy has weakened the yen, boosting exports, but the increase has not been enough to offset surging import costs.
Economists had forecast the deficit at around 600 billion yen for August.
Japan's exports to the rest of Asia, North America and the European Union have rebounded in recent months, as recoveries in many markets have gained momentum. Exports to the U.S. jumped nearly 21 per cent in August from a year earlier, while imports rose 14 per cent, leaving a surplus of 495.3 billion yen ($5 billion).
Exports of electrical machinery, vehicles and chemicals rose in value terms though export volumes fell in many categories.
The decline in the value of the yen has helped made exports relatively more competitive in overseas markets, but not as much as hoped for due to the offshoring of much of Japan's manufacturing to other countries.
"A strong improvement in export volumes remains unlikely, for two reasons," Capital Economics said in an analysis of the figures. "The first is that global demand is simply not strong enough ... Second, the weak yen has only had a limited effect on the competitiveness of Japanese exporters."
Japan runs deficits with many of its biggest trading partners, including China. Exports to mainland China rose about 16 per cent year-on-year in August to 1.1 trillion yen ($11.2 billion) while imports jumped almost 18 per cent to 1.4 trillion yen ($14.5 billion).
The deficit with Middle Eastern trading partners climbed 23 per cent to 1.13 trillion yen ($11.5 billion) as imports, mostly of fuel, surged 20 per cent.
Resource-scarce Japan has relied heavily on exports to drive its economy, and the deteriorating trade balance has added impetus to efforts to join regional trade arrangements.
Negotiations on the U.S.-led Trans-Pacific Partnership, intended to eventually become a region-wide trading bloc, resumed Wednesday in Washington.
Japan is among a dozen countries haggling over stringent new trade standards, including reductions in tariffs, protection of copyrights and other intellectual property and fairness in dealings with government procurement and state-owned companies.
Economic ministers meeting in Washington are hoping to make progress ahead of a special gathering of leaders in Bali, Indonesia early next month on the sidelines of the APEC annual summit.
Apart from Japan and the U.S., countries in the negotiations include Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Singapore, Peru and Vietnam.
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