Japan logs US$8.1b trade deficit in February
Japan logged another trade deficit in February, this time of US$8.1 billion (HK$62.9 billion) according to figures released on Thursday, reversing a year-earlier surplus and underscoring the uncertain state of the world’s third-largest economy.
The figures also highlight the size of the task ahead for Prime Minister Shinzo Abe’s government, which has pledged to turn around Japan’s fortunes with big public spending and by pressuring the nation’s central bank for more aggressive monetary policy.
The trade figures come as a new management team is installed at the Bank of Japan, stoking speculation of more easing measures aimed at kickstarting the limp economy.
Japan’s 777.5 billion yen (HK$63.3 billion) deficit in February was the eighth consecutive monthly shortfall and reversed a surplus of 25.9 billion yen (HK$2.1 billion) in the same month a year earlier, finance ministry data showed.
Total exports during the period slipped 2.9 per cent to 5.28 trillion yen while imports jumped 11.9 per cent to 6.06 trillion yen.
The rise in imports was largely due to Japan’s soaring energy costs. All but two of 50 nuclear reactors remain offline after the 2011 atomic crisis at Fukushima, which forced Tokyo to turn to pricey fossil-fuel alternatives.
The yen’s recent weakening was expected to help Japan’s hard-hit exporters although the trade picture remains cloudy after Tokyo logged its worst-ever monthly trade deficit of 1.63 trillion yen in January.
Japan also posted a record annual trade deficit through last year as exports to debt-hit Europe plunged and a bitter diplomatic spat with its biggest trade partner China weighed on demand.
Exports to China in February dropped 15.8 per cent, partly due to the territorial row and also the effect of the Chinese Lunar New Year holiday.
Shipments to Europe, a key market for Japanese products, tumbled 9.6 per cent, while exports to the US market climbed 5.7 per cent from a year ago.
Tokyo’s trade with Beijing was hit hard after an East China Sea islands feud and subsequent consumer boycott of Japanese goods hammered demand.
The dispute with China flared in September after Tokyo nationalised the Senkakus, which Beijing refers to as the Diaoyu islands.
It sparked the diplomatic row, huge anti-Japan protests across China and a consumer boycott that weighed heavily on sales of well-known Japanese brands, including those of top automakers Toyota, Nissan and Honda.
Japan’s overall economic picture remains unsteady. But the nation squeaked out of recession in the last quarter of last year with modest growth that, analysts say, would provide a foundation for a strengthening economy.
The 0.2 per cent expansion in GDP on an annualised basis in the quarter to December was welcome news for Abe, whose first few months in office have seen renewed optimism over the state of the economy.
Markets have cheered his policies, sending the benchmark Nikkei 225 stock index soaring in the past couple of months, while easing speculation has helped push down the value of the yen.
Japan’s exporters have complained about the unit’s soaring value since it hit a record around the 75-level against the dollar in late 2011. A high yen makes products less competitive overseas and shrinks the value of their repatriated foreign income.
The dollar was trading near the 96 yen level in Thursday trade.