Japan’s struggling economy listed its biggest October trade deficit, as even revival in exports was overwhelmed by the nation’s ever-increasing costs for imported fossil fuel for thermal power in the wake of the country’s nuclear shutdown. According to the data from the finance ministry, there was a shortfall of 1.09 trillion yen (around US$10.9 billion) on a record run of 16 months on deficit, even as Japanese exports gained 18.6 percent.
“Exports are rebounding on a pick-up in the overseas economy, while imports are likely to expand further before a sales-tax increase” in April, said Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo. “The deficits aren’t a good sign for Japan’s economy as they mean wealth is flowing out of Japan.” Fossil fuel imports contributed to nearly half of the increase in imports, with the value of petroleum shipments to Japan increasing to 67.8 percent from the previous year, and liquefied natural gas surging to 39.4 percent. The stretch of 16 monthly deficits is a record of sorts, the longest in comparable data back to 1979.
All this is despite the pickup in exports to Japan’s largest export destination – the United States. The labor market in the U.S. has shown “meaningful improvement” since the start of the Federal Reserve’s bond-buying program and the benchmark interest rate will probably stay low long after the purchases end, Fed Chairman Ben S. Bernanke said yesterday in a speech in Washington. This will result in an increase in U.S. purchases of Japanese exports, and the current data shows that U.S. retail sales rose in October, as U.S. consumer prices remained unchanged.
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