LATEST NEWS:

Business Desk

The Yomiuri Shimbun

Publication Date : 25-01-2013

Japan posted a record 6.93 trillion yen (US$70.68 billion) trade deficit for 2012, according to the latest figures released by the Finance Ministry, the largest since the nation recorded a 2.61 trillion yen deficit in 1980, just after the second oil shock in 1979.

The figure is primarily attributed to a decline in exports and an increase in imports, namely a fall in exports to Europe and China, and record-high imports of liquefied natural gas (LNG) for thermal power generation.

Marking the second consecutive year the nation has posted a trade deficit, the figure was 2.7 times bigger than 2.56 trillion yen in 2011.

Exports declined for the second year in a row to 63.74 trillion yen, down 2.7 per cent from 2011.

Exports to the European Union decreased by 14.7 per cent to 6.5 trillion yen. Due to the European fiscal crisis, exports of vehicles and other products shrank last year.

Exports to China also decreased by 10.8 per cent from 2011 to 11.51 trillion yen, down for two years in a row. In addition to a decline in exports of such products as industrial engines and steel products, the figure reflected the adverse effects of a boycott of Japanese vehicles in China as a result of the territorial dispute over the Senkaku Islands.

Meanwhile, imports for fiscal 2012 stood at 70.67 trillion yen, up 3.8 per cent from 2011 for the third consecutive yearly increase. LNG imports reached a record high of more than 6 trillion yen, up 25.4 per cent from 2011. Imports of smartphones from China also jumped in 2012.

As a result, the nation's trade deficit with China ballooned to a record high of 3.52 trillion yen. Japan also posted its first-ever trade deficit with the European Union at 139.7 billion yen.

In relations with the United States, however, Japan posted a 5.1 trillion yen trade surplus due mainly to a recovery in auto exports.

December trade figures, also released yesterday by the ministry, showed Japan posted a trade deficit for the sixth consecutive month at 641.5 billion yen. It marked the nation's largest monthly deficit since January 1979, when comparable data became available. The trade deficit was 208.3 billion yen one year earlier in December 2011.

Double whammy to Japan

By Takanori Yamamoto

The nation posted a record-high trade deficit for 2012, a trend likely to continue in the future.

Japan, a major trading nation, posted its first trade deficit in 31 years in 2011, due to adverse effects from the Great East Japan Earthquake in March 2011. In 2012, the nation's trade deficit surged.

In addition to a decline in exports due to the global economic slowdown and a strong yen, imports of liquefied natural gas--the main fuel for thermal power generation--increased by about 2.5 trillion yen from 2010 due to the nationwide suspension of nuclear power reactors.

The combined factors dealt the nation's economy a double whammy, resulting in a massive trade deficit.

Meanwhile, there are indications that the global economic downturn has bottomed out, and the yen's appreciation has begun to be rectified since the launch of Prime Minister Shinzo Abe's administration in December. Under such circumstances, export conditions have been improving.

However, if the yen becomes too weak, it would push up the cost of importing fuels, making it difficult to eliminate the nation's trade deficit.

For fiscal 2012, Japan likely will see a current account surplus, which includes interest payments and dividends on equities between firms and other factors in trade balance.

However, if such massive trade deficits persist, the nation's current account could also run into the red in the future.

*US$1=90.40 yen