Japan's trade deficit in Sept surges 64.1% from year earlier

TOKYO —

Japan logged a record run of monthly trade deficits data showed Monday after the country’s energy bill soared in September, but exports to China were buoyant after a territorial dispute a year earlier hammered demand for Japanese goods.

A sharp decline in the yen has generally helped Japan’s export picture, but the overall volume of shipments was still down last month while the nation’s energy bill remained high due to imports of pricey fossil fuels.

Energy imports surged after the 2011 Fukushima crisis forced the shutdown of Japan’s nuclear reactors, which once supplied one-third of the nation’s energy.

There is little public appetite to turn the reactors back on although Japan’s conservative government has said a restart was all but certain once safety could be assured.

“There might be some nuclear power plants brought back online this year, but that looks improbable based on the current public debate,” said RBS Securities chief economist Junko Nishioka.

“That means that Japan will continue to rely on energy imports, and any boost to exports from the weaker yen won’t be enough to turn around the trade deficit.”

On Monday, the finance ministry said Japan recorded a trade deficit of 932.1 billion yen ($9.5 billion), 64.1% higher than a 568.2 billion yen deficit in the year earlier.

That was the 15th straight month of deficit, the longest spell since comparable data started in 1979.

The value of exports rose 11.5% to 5.97 trillion yen, helped by shipments to China—Japan’s largest trading partner—which rose 11.4% from a year earlier.

The improving figures come after a territorial dispute over a set of islands in the East China Sea set off protests in China and a consumer boycott of Japanese branded goods.

The unrest last year forced Japanese businesses to temporarily shutter operations in the country, while the nation’s trading relationship took a huge hit.

Meawhile, exports to the key U.S. market were up 18.8% on year, but BNP Paribas chief economist in Tokyo Ryutaro Kono said growth appeared to be stalling.
“Exports to the U.S. appeared to have hit a plateau, while those to emerging economies have slowed down. Meanwhile, imports have been steadily increasing,” Kono told Dow Jones Newswires.

Overall, imports jumped 16.5% to 6.90 trillion yen on the higher energy costs and rising demand for some electronic equipment and smartphones, as demand for Apple’s iPhone soars in a country that was late to adopt the hugely popular gadget.

Japan’s mixed trade picture is largely a result of the weak yen, which boosts the costs of imports but also inflates the value of exports.

The yen has declined by about a quarter against the dollar in the past year, boosting exporters’ competitiveness overseas and their bottom line.

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

The moves are aimed at rebooting the world’s third-largest economy, which has suffered from growth-sapping deflation for years.

Abe’s efforts have started to bear fruit with the economy growing at an annualised rate of 3.8% in the first half of the year, far outpacing other G7 economies, while business confidence hit a five-year high.

Tokyo’s battle to conquer years of falling prices is also showing early signs of success with Japanese inflation hit a five-year high in August.

Still, the rise was mostly driven by rising household energy bills, suggesting the government’s plan to boost consumer demand was still to gain traction.

The country’s growth is also facing possible headwinds after Tokyo vowed to press ahead with a sales tax hike seen as crucial to shrinking a huge national debt, although critics fear it would derail a budding economic recovery.

(C) 2013 AFP

  • 2

    Onniyama

    Abenomics at work.

  • -2

    sangetsu03

    Abenomics at work.

    It takes at least three years for fiscal policy changes to be fully felt in the market place. As mentioned in the article, the deficits have been occuring for 15 months. Hard to fault Abenomics when Abe wasn't even prime minister yet.

    Abenomics is likely to fail unless the deregulation he has promised can outweigh the increase in the consumption tax, and the extra debt incurred by his "stimulus" programs.

  • -1

    some14some

    As mentioned in the article, the deficits have been occuring for 15 months. Hard to fault Abenomics when Abe wasn't even prime minister yet.

    PM Noda 6-months and PM Abe 9-months, Abe's responsibility is higher...if one reads his policies under 'Abenomics.'

  • -1

    inakaRob

    Trade Surplus is a good thing right? Well I guess it was a GREAT idea to shut off 1/3 of the countries power plants all at once, as opposed to a gradual switch over. This way Japan has been forced to buy millions of tons of coal and gas from China! Glad to see Japan listens to its population! No nukes! Trade Surplus yeah! Coal Power for the enxt 15 years! Strengthen China buying spending trillions on their fuel!

  • -1

    Onniyama

    sangetsu03. I completely agree with you. But have you ever noticed that when there is even the slightest positive economic news, the media reports that the effects of Abenomics are starting to be seen? I was mostly making fun of the bias that exists in the media here.

  • -1

    sangetsu03

    sangetsu03. I completely agree with you. But have you ever noticed that when there is even the slightest positive economic news, the media reports that the effects of Abenomics are starting to be seen? I was mostly making fun of the bias that exists in the media here.

    The bias is intentional, part of the Abenomics campaign is to create optimism. The newspapers have long been a mouthpiece of the LDP, and will only report stories which are non-critical of the powers-that-be. In this case, they are at least being sincere in their intentions, they know that Abe's fiscal policies are not going to work unless they create a little optimism to go with them.

    There have been positive effects, the major exporters are seeing much higher profits, and most publicly-traded companies have seen their paper value increase dramatically. But all of these companies can see the long-term problems Japan is facing with it's domestic economy, and they cannot become optimistic, regardless of what the papers report. These positive effects will be short-lived, as the consumption tax is going to give a two-handed hit to the economy, and nothing at all has been done to address excess governent spending.

    To be effective, Abenomics would have to change the fundamental culture of Japan. Not just the government/corporate/business culture, but that of the people as well. The people would have to become the drivers of the economy, not the old farts in the boardrooms, or the bureaucrats in the government offices.

    But it can't be done. Abenomics is just another flimsy wooden prop trying to hold a teetering and rotten economy. It exists only to delay the inevitable by a few years, and give more time to those with the means to find shelter. Those who don't have the means are going to be in for hard times.

    The only positive thing is that once the whole rotten mess falls, it can be swept away and replaced. Hopefully the next economy will be managed more wisely.

  • -2

    Gaijin Desi

    umm so basically people of Japan republic is responsible for deficit and not PM Abe as it is not in his hand to controll rising fuel bill on the price of peoples comfort.

  • -1

    sengoku38

    Saving $40 billion a year by restarting nuclear reactors would go a long way to help Japan.

  • -2

    JeffLee

    "Abenomics at work."

    The value of exports rose 11.5%. Not a bad result, considering the fact that Abenomics can't be blamed for Japan's nuclear crisis.

    In addition, GDP growth figures have been upgraded to 3.8 percent. So I assume your comment wasn't ironic.

  • 1

    spudman

    The value of exports rose 11.5%.

    How much did he devalue the yen? That might be the difference there.

  • 0

    ThonTaddeo

    Not a bad result, considering the fact that Abenomics can't be blamed for Japan's nuclear crisis.

    It certainly can. The main reason the lack of nuclear power is a "crisis" economically is that the sudden decision to abandon it in favor of fossil fuels is all the more expensive when the currency you're importing those fossil fuels with with has fallen 25% in less than a year.

  • 0

    sangetsu03

    The value of exports rose 11.5%. Not a bad result, considering the fact that Abenomics can't be blamed for Japan's nuclear crisis. In addition, GDP growth figures have been upgraded to 3.8 percent. So I assume your comment wasn't ironic.

    The value of exports is up, but relatively-speaking, numbers are still down, and are nowhere near pre-2008 levels. As for GDP gowth, this includes increases in government spending, so actual net growth is probably closer to one percent.

  • 0

    bruinfan

    I hope the yen can rise again (perhaps to 90/US$). OK the export companies got their turbo shot, but most Japanese are paying for it with higher energy costs. If it was truly a multiplicative effect that helped them boost productivity then this one year (and counting) benefit should have lasting effects, even if it ends. Thumb me down if you want but the higher energy costs are hurting almost everyone in this country.

  • 1

    chucky3176

    Japan would still have a deficit even if all the nuclear reactors are turned on.

  • 0

    JohnY921

    “Japan would still have a deficit even if all the nuclear reactors are turned on.”

    Yes, Japan would have had a deficit with all the Fukushima reactors. However, without Abe’s monetary easing policy, Japan couldn’t have a record level deficit in Sept. Abenomics is at work.

  • -3

    sangetsu03

    “Japan would still have a deficit even if all the nuclear reactors are turned on.”

    Yes, Japan would have had a deficit with all the Fukushima reactors. However, without Abe’s monetary easing policy, Japan couldn’t have a record level deficit in Sept. Abenomics is at work.

    Japan has had a "record level deficit" every September for the last.... 25 years?

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