Japan logs worst monthly trade deficit of $17.4B

TOKYO (AFP) – Japan logged its worst ever monthly trade deficit in January despite an upturn in exports as the yen’s recent sharp drop pushed fuel costs higher, official data showed Wednesday.

The world’s third-biggest economy is mired in recession and a mood of optimism in the stock market and among analysts has so far failed to translate into good macro-economic figures.

The finance ministry data showed Japan suffered a shortfall of 1.63 trillion yen ($17.4 billion) in January, the worst deficit on record for a single month, exceeding the previous record of 1.48 trillion yen for the same month last year.

Comparable data began in 1979. Japan tends to post bad trade figures in January, with exports stalling because of New Year holidays.

Economists on average had expected a shortfall of 1.3 trillion yen. Taro Saito of the NLI Research Institute said the deficit did appear “a lot worse than I had expected”.

“Overall, you can’t make the deficit go away that easily,” Saito told Dow Jones Newswires, adding that Japan would likely see deficits over the coming months.

January exports increased 6.4 per cent from a year earlier to 4.8 trillion yen, the first rise in eight months on higher shipments of automobile parts and other items.

But imports rose 7.3 per cent to 6.43 trillion yen, boosted by heavier bills for petroleum products, natural liquefied gas and crude oil.

Japan’s fuel imports have risen since the 2011 earthquake and tsunami disaster sparked the world’s worst nuclear accident in a generation, sending most atomic power plants offline.

But the cost of imported fuel, which is denominated in US dollars, has risen for Japan as the yen has tumbled over the past few months, driven by expectations of aggressive monetary easing under Prime Minister Shinzo Abe.

The dollar’s average rate during January was 86.93 yen against 77.33 yen a  year earlier, according to customs data, meaning the yen was 12.4 per cent cheaper on year.