27/01/2015 06:03 AST
Japan’s trade deficit swelled to a record $109bn in 2014, data showed yesterday, mostly because of huge post-Fukushima energy bills, but analysts said a recent drop in oil prices would shrink the yawning gap.
The shortfall of ¥12.78tn, Japan’s fourth-consecutive annual deficit, was 11.4% wider than 2013 and was the worst since records began in 1979, according to the finance ministry.
Fuel costs have weighed heavily on Japan as the resource-poor country struggles to plug a huge energy gap after the 2011 atomic crisis forced the shutdown of nuclear reactors that once supplied more than a quarter of its power.
That problem has been exacerbated by a sharp fall in the yen, which hiked the cost of energy imports purchased in foreign currencies.
In December alone, however, Japan’s trade deficit almost halved over the previous year to ¥660.7bn, largely thanks to falling oil prices.
The trade balance last month was also helped by a better-than-expected 12.9% jump in exports.
Japan’s trade deficit “is set to narrow further as lower energy prices are still not fully reflected in import costs”, Capital Economics said in note after the figures were published.
“The key development for the trade balance in coming months... remains the plunge in the price of crude oil since last summer. So far, this is only partly reflected in the cost of imported petroleum.
“Lower energy prices may briefly return the trade balance to surplus in coming months, before a weaker yen and a rebound in the oil prices push it back into deficit,” it said.
Crude prices have lost more than half their value since June, sitting at less than $50 a barrel.
The data yesterday showed Japan’s imports rose 5.7% to a record ¥85.89tn in 2014, outstripping a 4.8% jump in exports to ¥73.11tn.
Exports to the European Union were up 8.3% over the year, while US-bound shipments grew 5.6%. China-bound exports rose 6.0% in 2014, the data showed.
“There is no doubt that external demand will contribute positively to Japan’s economic growth,” Hiroshi Watanabe, an economist at SMBC Nikko Securities, told Bloomberg News.
Concerns about Japan’s recovery have increased since a sales tax rise in April slammed the brakes on consumer spending, plunging the economy into recession and throwing the success of Prime Minister Shinzo Abe’s growth project into question.
That, in turn, has boosted speculation the Bank of Japan will soon be forced to expand its already huge asset-buying stimulus scheme, a scheme similar to the Federal Reserve’s quantitative easing programme.
Last week, Japan’s central bank slashed its inflation outlook, but it held off fresh easing as policymakers boosted their growth forecasts and said the economy was rebounding.
AFP
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