Japan reported its largest monthly trade deficit since 1983 and the first for five years on Feb. 22. The trade balance slumped to a deficit of 348.9 billion yen (US$2.95 billion) in January compared with surpluses of 911.9 billion yen in December and 193.9 billion yen a year earlier. It was also more than three times bigger than the expected shortfall of about 102 billion yen.
Exports in January rose 13.5% to 5.01 trillion yen while imports expanded 27% to 5.36 trillion yen, the finance ministry said.
Financial markets took the data in stride as analysts said the weak figures were largely due to seasonal factors and high oil prices, and were unlikely to derail Japan's economic recovery. "Aside from the effects of high oil prices, growth in imports in general can be interpreted as a sign that domestic demand is robust, another reason to say the Japanese economy is on the right track," said Koji Kobayashi, senior economist at Mizuho Research Institute.
"Usually January is the month when the value of exports declines due to New Year holidays in Japan. I would say the deficit will disappear in February," Kobayashi predicted.
Japan's trade surplus ballooned in the 1980s and 1990s, becoming the envy of other industrialized nations. However it failed to usher in an era of steady growth and the world's number two economy stagnated for a decade after its "bubble economy" burst in the early 1990s.
Analysts say this time around, rising exports are accompanied by a pick-up in corporate and consumer spending although soaring energy costs are hurting the Japanese economy, which gets most of its oil and coal from overseas. Crude oil imports jumped 67.2% while the value of imports of electronic parts was up 35.7% year-on-year, the ministry said.
Exports to the U.S. rose 21.7% for a 12th straight monthly increase, with shipments to the EU up 14.8% for a third consecutive monthly increase. At the same time, however, exports to Asia managed only a modest increase of 5.1%.
Copyright Agence France-Presse, 2006