Japan's November trade deficit expands 35%

TOKYO —

Japan posted a record November trade deficit, data showed Wednesday, underscoring how soaring energy bills have weighed on the country’s trade balance despite a jump in exports.

Government figures showed a 35.1% on-year rise to a 1.29 trillion yen ($12.6 billion) deficit, the worst result for November and the 17th straight month of shortfall—the longest stretch since comparable data began more than three decades ago.

Japan’s energy imports surged after the 2011 Fukushima crisis forced the shutdown of the country’s nuclear reactors, which once supplied a third of the nation’s power.

A sharp decline in the yen, which is good for exporters’ profitability, has also forced up the cost of importing pricey fossil-fuels to plug the country’s energy gap.

The yen has been under pressure since Japanese Prime Minister Shinzo Abe, who took office late last year, launched a policy blitz that meshed government spending with a central bank monetary easing plan unveiled in April.

The policy drive, dubbed Abenomics, is aimed at rebooting the world’s third-largest economy, which has suffered from growth-sapping deflation for years.

Wednesday’s trade figures come on the back of slowing GDP growth after a sizzling expansion that saw Japan outpace other G7 nations in the first half of the year.

Japan’s third-quarter economic growth came in at a final reading of 0.3%, down from an initial figure of 0.5%—and a sharp slowdown from 0.9 percent growth in the previous quarter.

But firms appear to be taking the slowdown in their stride. On Monday, a Bank of Japan survey that polls more than 10,000 companies showed business confidence has soared to a six-year high.

Part of the reason is the sharp weakening of the yen over the past year, which has seen Japanese exporters such as Sony and Toyota booking rosy profits as the cheaper unit made them more competitive overseas while inflating repatriated earnings.

That benefit showed up in the trade data as exports last month rose 18.4% to 5.90 trillion yen, backed by robust shipments of automobiles.

Imports soared 21.1% to 7.19 trillion yen, owing to Japans’ hefty bills for oil and gas purchases.

Exports expanded in most major regions, with U.S.-bound shipments up 21.2% to 1.13 trillion yen while those to the European Union rose 19.4% to 599.4 billion yen.

Goods shipped to Japan’s biggest trading partner China surged 33.1% to 1.14 trillion yen, as the impact of a consumer boycott on Japanese brands fades.

The boycott came after a Tokyo-Beijing territorial dispute over islands in the East China Sea set off protests in China and soured already testy relations between the Asian giants.

As the conservative prime minister nears his one-year anniversary, there is rising speculation that the central bank will expand its easing program—which injects vast sums into the financial system—as growth slows and consumers prepare for a sales tax hike that critics fear will derail a budding recovery.

Tokyo has approved a spending package worth almost $54 billion to offset the tax hike—to 8% from 5%—seen as crucial to bring down Japan’s huge national debt.

Analysts have warned that Abe’s bold pro-growth program is not enough on its own without promised economic reforms.

A proposed shake-up, including loosening labor laws and signing free trade deals, is seen as key to ushering in lasting change.

(c) 2013 AFP

  • -1

    G.MAL.O.Q

    Eco 101 for you : what matters is the balance of payments....

  • 2

    wildwest

    I'm not against restating nukes but using energy bills as the main reason for restart and increase in deficit without giving actuals could be missleading, all imports are costing more not just those used in exports but also those items imported for domestic consumption such as food and re/building materials etc. Food for thought.

  • 2

    Cricky

    Government spending increases, debt increases, tax base shrinks government increases debt....there appears no plan for the future besides more debt. My grandchildren will have to pay for the madness of this government. Is there a word beyond bleak?

  • 1

    sangetsu03

    Tokyo has approved a spending package worth almost $54 billion to offset the tax hike—to 8% from 5%—seen as crucial to bring down Japan’s huge national debt.

    8% won't bring down the national debt, especially when the 3% increase in the tax has already been negated by a more than 3% increase in spending.

    The fact that confidence among business is at a "six year high" is misleading. When starting at the bottom, the only way to go is up. Ask these same companies how confident they are about the economy's direction for the next ten years, and you will get a much different answer.

  • 2

    wipeout

    8% won't bring down the national debt, especially when the 3% increase in the tax...

    No no no no no. Jesus.

    It's 3 over 5 multiplied by 100, a 60% increase.

    Also, even if we overlook your maths - which is even worse than mine - you can't place the figure for an increase in "spending" directly against the increase in a "tax", because they're not linked. Increasing spending by the same percentage as the tax increase is not the same as neutralizing the extra revenue brought by the tax increase.

  • 2

    fxgai

    Cricky,

    Government spending increases, debt increases, tax base shrinks government increases debt....there appears no plan for the future besides more debt.

    That's right. But don't worry, apparently debt doesn't matter.

    My grandchildren will have to pay for the madness of this government.

    Not if you get your kids foreign passports they won't.

    sangetsu03,

    8% won't bring down the national debt, especially when the 3% increase in the tax has already been negated by a more than 3% increase in spending.

    Don't get me wrong, I think short term stimulus measures are stupid, but the stimulus package is only a once-off, whereas the increase from 5% to 8% will be permanent.

    The only way to deal with the debt is reform the welfare payments I reckon. The NISA scheme starting next year is pretty crucial for young Japan residents to get themselves into.

    wipeout,

    Very picky! Everyone understands that the rate increases from 5% to 8% - so it's an extra 3% of what you are buying, but of course you are right that it is a 60% increase in the amount of the tax. But when the tax rate is only 5% to start with, "60%" or "100%" increase is just making it out to sound worse than it really is.

    Hey, I don't like tax either. Cut the size of government is fxgainomics, but few Japanese politicians have the balls to argue for this.

  • 1

    wipeout

    Very picky!

    The real increase is 20 times higher. As 3 percent is wrong, who knows whether the "3 percent or more" increase in government spending he mentioned is just as wrong? In any case it's illogical to cram two percentages together like this for purposes of comparison, because they are percentages of different things.

    But when the tax rate is only 5% to start with, "60%" or "100%" increase is just making it out to sound worse than it really is.

    It is however less confusing to use correct figures, even if they make people feel sad.

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