Japan posted a record trade deficit in January as the yen’s strength and weaker global demand eroded manufacturers’ profits and slowed the nation’s recovery from last year’s earthquake and tsunami.
The trade deficit widened to 1.48 trillion yen ($19 billion) and shipments dropped 9.3 percent from a year earlier, the Ministry of Finance said Monday in Tokyo. The median estimate of 28 economists surveyed by Bloomberg News was for a trade gap of 1.46 trillion yen.
The currency’s advance has hampered business at companies including Sony Corp., Japan’s largest consumer electronics exporter, which more than doubled its annual loss forecast this month. Japan last year posted its first annual trade deficit since 1980 and the Bank of Japan last week unexpectedly expanded stimulus a day after a government report showed gross domestic product contracted last quarter.
“Recently we’ve seen a decline in the international competitiveness of Japanese manufacturers,” Junko Nishioka, chief Japan economist at RBS Securities Japan Ltd., said before the report. “It’s unlikely that GDP growth will accelerate this year.“
The trade figures may have been skewed by China’s Lunar New Year holidays falling in January instead of February this year. The shift in the holiday reduced business days in markets from China to South Korea.
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A woman arranges Japanese 10,000 yen notes for a photograph in Tokyo. (Bloomberg) |
Japan’s GDP contracted an annualized 2.3 percent last quarter. Net exports, or overseas shipments less imports, subtracted 2.6 percentage points from this figure, the government said in a report last week.
The country’s trade deficit of 2.49 trillion yen in 2011 was the second largest since World War II. That also contributed to the nation’s current-account surplus sliding to a 15-year low in 2011.
March’s earthquake and tsunami led to the idling of nuclear plants and a surge in energy imports that contributed to the arrears. Japan’s liquefied natural gas imports rose 12.2 percent to a record in 2011 as power utilities increased thermal power generation by 12.6 percent from the previous year between April and September.
Bank of Japan (8301) Governor Masaaki Shirakawa said last month the trade deficit ‘’won’t become a firmly established trend” because it is driven by “temporary factors.”
Shirakawa’s board on Feb. 14 unexpectedly expanded an asset-purchase program to 65 trillion yen from 55 trillion yen, and set a price stability goal of 1 percent inflation.
“Clearly Japanese manufacturers are struggling,” Hiroshi Shiraishi, an economist at BNP Paribas SA in Tokyo, said before the report. “We aren’t really expecting a major pick-up in external demand because the U.S. and Europe are undergoing balance sheet adjustments.”
The euro area’s economy contracted in the fourth quarter for the first time in 2 1/2 years. Europe’s woes were again highlighted Feb. 13 when Moody’s Investors Service cut the ratings of six European countries including Italy, Spain and Portugal.
Japan’s exports to the European Union, its third-largest export region, fell 39 percent from 2007 to last year, according to Ministry of Finance figures.
The competitiveness of South Korean companies against Japanese has been enhanced as the yen rose 7.8 percent against the won in the past 12 months. Japan sold a record 8.07 trillion yen on Oct. 31 after the currency reached a postwar high of 75.35 against the U.S. dollar. Finance Ministry data released Feb. 7 showed the nation also intervened on the foreign currency market during the first four days of November.
Elpida Memory Inc., Japan’s biggest maker of dynamic random access memory and supplier to Apple Inc., said last week it has been unable to secure financing from the government and is “uncertain” whether it can stay in business.
South Korea’s Samsung Electronics, which has the largest share of the global DRAM market, had 7.34 trillion won ($6.5 billion) in operating profit from selling chips last year.
(Bloomberg)
