Japan sees deficit after March surplus
Print Edition
JAPAN posted a trade deficit in April following a surplus in March, and economists said shortfalls were likely to persist given the weakness of the yen.
The 53.4 billion yen (US$439.6 million) deficit in April for the world’s third-biggest economy compared with a 227.4 billion yen surplus in March, the first in several years.
But thanks to lower oil and gas prices, the deficit fell more than forecast, nearly 94 percent from April 2014, when the deficit was 825.5 billion yen, the Finance Ministry said yesterday.
The yen, now trading around 121.60 to the US dollar, is at its lowest level in price-adjusted terms since January 1973, according to Richard Katz of The Oriental Economist Report.
That means imports are costing Japan more in relative terms than in past decades. Oil prices appear to have bottomed out, auguring further deficits, economists say.
“Overall, therefore, the trade balance will likely remain in the red in coming months,” said Marcel Thieliant of Capital Economics.
The overall trade balance slipped into deficit in 2011 as oil and gas imports surged following the disaster at the Fukushima Dai-Ichi nuclear power plant, which led to closure of all of the country’s reactors for safety checks.
Japan’s trade deficit hit a record early last year as consumers stepped up purchases to beat a tax hike on April 1, 2014, which was followed by a brief recession.
Costs for importing oil and gas and a shift of Japanese manufacturing to overseas markets, plus persistent weakness in key export markets, have so far precluded an export-led recovery.
A surge in visits by foreign tourists is helping, though demand overseas is sluggish, and inventories are rising due to higher imports late last year, said Masamichi Adachi, of JPMorgan.
“As a result, we think that both exports and imports will slow or even decline this quarter,” he said.
In April, exports rose 8 percent year on year to 6.55 trillion yen while imports fell 4.2 percent to 6.6 trillion yen.
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