Japan's trade deficit rose to a record 6.93 trillion yen ($78.3 billion) in 2012 as fuel imports surged and a bitter territorial dispute with China hammered its exports.
Japan’s trade deficit rose to a record 6.93 trillion yen ($78.3 billion) in 2012 as fuel imports surged and a bitter territorial dispute with China hammered its exports.
The finance ministry figures released Thursday showed that energy imports surged 34 percent last year to 24.08 trillion yen ($272 billion) after Japan’s nuclear plants were taken offline following the Fukushima Dai-Ichi nuclear accident that was sparked by the earthquake and tsunami disasters in March 2011.
Exports have suffered from plunging demand in crisis-stricken Europe and troubles with China after a flare-up over uninhabited islands in the East China Sea prompted anti-Japanese protests last fall.
The annual trade deficit was a 170 percent increase from the deficit of 2.56 trillion yen recorded in 2011. As an export powerhouse, Japan ran trade surpluses until the 2011 disasters and the global economic slowdown combined to push it into deficits.
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But for December last year, the trade deficit narrowed to 641.5 billion yen ($7.25 billion) from the 954.8 billion yen shortfall in November. That was despite a 5.8 percent drop in exports for the month.
Recovering overseas demand has coincided with a recent decline in the yen’s value against the U.S. dollar and even bigger drops against other major currencies driven by expectations that stimulus spending and monetary easing championed by Prime Minister Shinzo Abe, who took office a month ago, will help drive a turnaround in Japan’s moribund economy.
But the weak yen policy has rankled some of Japan’s trading partners, raising worries that it might precipitate a destabilizing round of “competitive” devaluations. It also raises the relative costs of imports of consumer goods and commodities that resource-scarce Japan relies on to power its industries.
Abe has focused his stimulus program on boosting manufacturing competitiveness while spurring domestic demand through a sharp increase in government spending on public works. Ample capital circulating due to monetary easing in most major economies has helped drive a rally in Japan’s stock market, but making real structural changes in the economy after two decades of stagnation will take time.
The tensions with Beijing remain a potential pitfall for the recovery, despite Japan’s efforts to shift more of its trade and offshore manufacturing into Southeast Asia and India.
Japan’s exports to China sank 10.8 percent last year, to 11.5 trillion yen ($130 billion) while imports rose 2.7 percent to 15.03 trillion yen ($170 billion), leaving a deficit of 3.52 trillion yen ($39.8 billion).
Exports to the European Union fell by nearly 15 percent, producing a deficit of 139.7 billion yen ($1.6 billion).
But trade with North America, mainly the U.S., rebounded, with exports climbing 12 percent and imports about 2 percent, for a surplus of 4.9 trillion yen ($55.4 billion).