Japan logs record trade deficit on power shortages, high yen

TOKYO - Agence France-Presse

An oil tanker goes by oil tanks in Kawasaki, west of Tokyo, yesterday. Japan posted a record high trade deficit in January after its nuclear crisis shut down nearly all reactors. AP photo

Japan posted a record trade deficit in January, data showed yesterday, as fuel imports rose following last year’s nuclear disaster while exports were hit by a strong yen and slumping demand in Europe.

The January deficit came in at 1.475 trillion yen ($18.5 billion), the highest since records began in 1979, the finance ministry said.

The record figure comes after Japan registered its first annual trade deficit in 31 years in 2011, and triggered warnings that the country was likely to see more negative figures throughout the year.

The January statistic was more than triple the year-before shortfall of 479.4 billion yen and far exceeded the previous monthly record of 967.9 billion yen in January 2009 during the global financial crisis.

It was the fourth straight monthly deficit but in line with a 1.468 trillion shortfall forecast in polls by Dow Jones Newswires and the Nikkei business daily. The Nikkei 225 index closed the day 1.08 percent higher.

Exports fall sharply
Japan’s overall exports tumbled 9.3 percent to 4.510 trillion yen last month because of lower shipments of semiconductors and other electronic devices.

“We expect this trend of deficit to continue until early 2013” with demand for fossil fuel power generation staying strong while the slow global economy and the high yen hurt exports, said Barclays Capital economist Yuichiro Nagai.

Imports surged 9.8 percent to 5.985 trillion yen, with purchases of liquefied natural gas shooting up 74.3 percent and coal rising 26.5 percent.

Demand for fossil fuels has surged in Japan after the March 11 earthquake-tsunami disaster sparked the world’s worst nuclear accident in 25 years, leading the government to take many atomic reactors offline.

Satoshi Osanai, economist at Daiwa Institute of Research, said “the trade deficit is likely to continue” for the time being, adding that Europe’s debt woes have also dealt Japan a blow.

“The U.S. economy is underpinning (Japanese) exports, as seen in higher US-bound shipments of automobiles, but demand from Europe is weak,” he said.

Japan’s surplus with the European Union in January dived 98.9 percent to 700 million yen, with shipments falling 7.7 percent to 531.3 billion yen. Exports of automobiles dived 29.7 percent and electronic parts slumped 30.2 percent.

European demand has slumped owing to the region’s debt crisis, which threatens to plunge the global economy back into recession.

With the United States, Japan’s trade surplus fell 7.6 percent to 265.3 billion yen.

S&P warns Japanese on debt

TOKYO – Reuters

Standard & Poor’s warned yesterday it could lower Japan’s sovereign rating if the economy expands less than expected or if public debt continues to grow, as the country’s unpopular government struggles to win support for higher taxes.

The ratings agency affirmed its AA- rating on Japan with a negative outlook, but also warned that higher taxes wouldn’t solve the structural problems that push up Japan’s welfare spending and increasingly pressure state coffers.

Japan’s debt burden is the heaviest among industrialized economies, and it may not be able to postpone drastic spending cuts and aggressive tax hikes much longer as Europe’s debt crisis threatens the global economy.

One problem is that Japan’s ruling Democratic Party lacks the majority needed to override opposition in parliament, so policy making often moves at a slow pace.