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