Government data released on Thursday revealed that Japan’s trade deficit for the month of March amounted to US$3.7 billion, more than four times the year before, primarily caused by rising import costs as a result of the rapidly weakening value of the yen. However, this was much less than the $4.9 billion that was predicted by the Nikkei business daily. Additional data showed that exports were up 1.1% for the month, while imports rose 5.5%.
The Japanese Finance Ministry said that the yen’s average value against the U.S. dollar in March was 94.08, while during the same month in 2012 the average was 81.04, equaling a 16% decrease in value of the currency. While a weakened yen is very beneficial for exports, such as the auto industry not losing as much money when shipping cars overseas, it increases the cost of import bills, and will Japan currently the world’s largest importer of fossil fuels, this is a big problem. With just over two years passed since the 2011 Fukushima disaster, the country continues to keep all but two of its nuclear reactors offline, instead having to rely on imported oil and liquified natural gas (LNG) for energy needs.
These same factors contributed to the fiscal 2012 year ending with a $83.4 billion trade deficit. For the year, exports were down 2.1% and imports rose 3.4%. The 2012 deficit was a substantial 84% increase from the $45.1 billion recorded the year before.
Comments Off on JDP Startup Corner: Pros & Cons of Working with a Partner in Japan