Bloomberg News

Japan Posts Longest Run of Trade Deficits in Three Decades

March 21, 2013

Japan February Exports Fall 2.9% With Yen Effect Yet to Kick in

A worker walks past container trucks at a shipping terminal in Yokohama City, Kanagawa Prefecture, Japan. Photographer: Akio Kon/Bloomberg

Japan posted its longest run of trade deficits in three decades as exports fell in February, underscoring challenges for Bank of Japan (8301) Governor Haruhiko Kuroda in reviving the world’s third-biggest economy.

Shipments dropped 2.9 percent from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a 1.7 percent decrease. Imports rose 11.9 percent, leaving a trade shortfall of 777.5 billion yen ($8.1 billion).

Kuroda is scheduled to give his first press conference from 6 p.m. in Tokyo today, with news from Bank of Japan briefings usually embargoed until after they finish. The new central bank chief has pledged more aggressive monetary easing that may further weaken a yen down about 10 percent against the dollar this year, a move that’s already swelling the nation’s import bill as nuclear-plant shutdowns force bigger imports of fossil fuels.

“There’s a time lag until the weakening yen will push up exports,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo, who said that imports of oil and liquefied natural gas drove the biggest gain in inbound shipments since October 2011.

February’s deficit was the eighth consecutive monthly trade shortfall, the longest stretch since 1980.

The yen strengthened 0.6 percent to 95.41 per dollar as of 6:37 p.m. in Tokyo.

China Holiday

Exports to China fell 15.8 percent as Asia’s largest economy celebrated the week-long Lunar New Year holiday in February, while shipments to Asia dropped 5.2 percent. Exports to the U.S. rose 5.7 percent, while those to the European Union fell 9.6 percent.

Extra easing by the Bank of Japan is “likely to weaken the yen, boosting import costs and expanding the trade deficit,” Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo and a former central bank official, said before the release. “The positive impact of the declining yen has yet to be seen.”

Kuroda will speak on monetary policy at the press conference, he told reporters in Tokyo today. Deputy Governors Kikuo Iwata and Hiroshi Nakaso will also speak to the press, the BOJ said in a statement today.

Analysts at banks from JPMorgan Chase & Co. to Barclays Plc expect the BOJ to add stimulus as soon as the next policy meeting on April 3-4.

Kubota Corp. (6326), a tractor maker, said last week that the weakening yen will push sales to a record in the fiscal year starting April. Other exporters including Toyota Motor Corp. (7203) and Nintendo Co. (7974) have raised profit estimates as the yen’s slide raises the value of their foreign revenue.

Goldman’s Forecast

Goldman Sachs Group Inc. on March 18 raised its forecast for Japan’s economic growth in fiscal 2013 to 2.3 percent from 2.1 percent. “Typically, a weak yen is swiftly reflected in higher import prices and a rise in the value of imports, but export growth usually comes with a lag, meaning the trade deficit could persist,” Goldman economists wrote in a note.

Obstacles to Prime Minister Shinzo Abe’s campaign to revive the economy include an aging population, the world’s biggest government debt burden, and restrictions on labor-market flexibility.

To contact the reporters on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net; Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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