Japan’s Finance Ministry revealed data today that shows the economy experienced its worst ever trade deficit for the month of January since records started compared in 1979. The rising costs of fossil fuel imports and a weaker yen were attributed to the 1.63 trillion yen (approx. $17.4 billion) shortfall.
Economists were expecting a deficit of only 1.3 trillion yen ($13.9 billion). The government data showed that the country’s exports were up by 6.4% from a year earlier, the first increase in eight months, due to shipments of auto and manufacturing parts. Imports were also up, however, by 7.3%, almost solely based on the rising costs of oil and liquefied natural gas (LNG). As the world’s largest importer of fossil fuels, Japan’s incoming shipments have been on a steady rise since the 2011 Fukushima disaster, which resulted in all but two of the country’s nuclear reactors being taken offline.
While the exports as a whole were overshadowed by imports, another notable increase was the 3% rise in shipments to China, a strong sign that the ongoing territorial dispute between Tokyo and Beijing is at least having a slightly smaller impact on business and trade. Analyst Takeshi Minami noted that while the yen has rapidly weakened under Prime Minister Shinzo Abe’s pressure, the premier can’t just keep following that pattern of inflation. He says the costs of abandoning nuclear power on the economy are too high, and Abe will have to resort to restarting some reactors this summer in order to reduce the reliance on fuel imports.[via Business Times]