Japan’s trade deficit jumps to its highest level in eight years as commodity imports surge


Tokyo — Japan recorded the largest trade deficit in a month in the eight years of January. This is because high energy costs have boosted imports, manufacturers have suffered from global supply constraints, and car shipments have declined.

The widening trade deficit highlights the world’s third-largest economic vulnerability to slowing demand due to rising commodity costs and struggling to maintain momentum in neighboring China’s economy.

According to data from the Ministry of Finance, imports rose 39.6% year-on-year to a record high of 8.5231 trillion yen ($ 73.81 billion) in January, surpassing the median market forecast of 37.1. Percent increase.

This far exceeded the 9.6% increase in exports for the year to January, and the trade balance was the largest deficit of 2.1911 trillion yen in the month since January 2014.

The deficit was much larger than the median estimate of the shortfall of 1.607 trillion yen.

Takumi Tsunoda, a senior economist at the Shinkin Central Bank Research Institute, said, “Because factory utilization rates are usually low during the year-end and New Year holidays, exports tend to decline due to seasonal factors.”

“So it’s easy to have a deficit in the trade balance for the month, but even with that in mind, the deficit was still large.”

A major factor in the deficit was a decline in automobile exports, said Mr. Tsunoda, who turned from an expansion last month to a contraction.

Manufacturers such as Toyota and Suzuki have been forced to temporarily close some factories after facing supply chain disruptions and pressures from a record surge of COVID-19 infections at home. ..

Imports of oil, coal and liquefied natural gas surged, boosting imports.

Exports to China decline

By region, exports to Japan’s largest trading partner, China, fell 5.4% in the 12 months to January, recording the first contraction in 19 months. Meanwhile, imports increased by 23.7%, the largest increase in four months.

This could be one of the causes of slowing exports and accelerating demand ahead of China’s week-long Lunar New Year holiday, which began on the last day of January.

According to some analysts, the bigger cause of concern was China’s massive economic slowdown in the face of weakening consumption and a real estate recession.

“China’s economic slowdown could weaken future exports,” said Ryosuke Kataki, a market economist at Mizuho Securities.

Shipments to the United States, another major market for Japanese products, increased 11.5% in January. This is because the increase in machine shipments outweighed the decrease in automobile exports.

According to other government data, orders for key machinery, a leading indicator of capital investment over the next 6-9 months, increased 3.6% month-on-month in December, outpacing the expected 1.8% decrease.

Manufacturers expected core orders to decline 1.1% from January to March after a 6.5% increase in the previous quarter.

Government data said Tuesday that the Japanese economy did not grow slightly more than expected in the final quarter of 2021 as the decline in coronavirus cases underpinned consumption.

($ 1 = 115.4800 yen)

Daniel Leussink and Kantaro Komiya

Reuters

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