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February sees eighth straight trade deficit

Data illustrate size of task Abe faces in juicing the economy

AFP-JIJI

Japan logged its eighth straight trade deficit in February, this time of ¥777.5 billion, underscoring the uncertain state of the economy, according to figures released Thursday.

The data also highlight the size of the task ahead for Prime Minister Shinzo Abe’s government, which has pledged to turn around the nation’s fortunes with massive public works spending and by pressuring the Bank of Japan over more aggressive monetary policy.

The trade figures, released by the Finance Ministry, come as a new leadership team is installed at the BOJ, stoking speculation of more easing measures aimed at kick-starting the limp economy.

The ¥777.5 billion deficit contrasted with a surplus of ¥25.9 billion logged in February 2012, according to the data. Total exports during the period slipped 2.9 percent to ¥5.28 trillion, while imports jumped 11.9 percent to ¥6.06 trillion.

The rise in imports was largely due to soaring energy costs. All but two of Japan’s 50 nuclear reactors remain offline because of the Fukushima crisis, forcing utilities to turn to pricey fossil-fuel alternatives.

The yen’s recent weakening was expected to help hard-hit exporters, but the trade picture remains cloudy after Japan logged its worst-ever monthly trade deficit, of ¥1.63 trillion, in January.

The nation also posted a record annual trade deficit through 2012 as exports to debt-hit Europe plunged and the bitter diplomatic spat with its biggest trade partner, China, over the Senkaku islets weighed on demand.

Exports to China in February plunged 15.8 percent, partly due to the territorial row and also the Chinese New Year holiday period. Shipments to Europe tumbled 9.6 percent, but exports to the U.S. climbed 5.7 percent compared to a year ago.

Tokyo’s trade with Beijing was hit hard after the government effectively nationalized the East China Sea islets, which China claims as its won, reawakening the bitter feud and sparking a Chinese consumer boycott of Japanese goods that hammered demand. The boycott weighed heavily on sales of well-known Japanese brands, including carmakers Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co.

Japan’s overall economic picture remains unsteady. However, the nation squeaked out of recession in the last quarter of 2012 with modest growth that, analysts say, could provide a foundation for a strengthening. The 0.2 percent expansion in gross domestic product on an annualized basis in the October-December quarter was welcome news for Abe, whose first 2½ months in office have seen renewed optimism over the economy.

Markets have cheered his policies, sending the benchmark Nikkei 225 stock average soaring in the past couple of months, while speculation about monetary easing has helped push down the value of the yen against major currencies.

Domestic exporters have griped about the yen’s soaring value since it hit a record around ¥75 against the dollar in late 2011. A strong yen makes their products less competitive overseas and shrinks the value of repatriated foreign income. The dollar was trading near ¥96 Thursday morning.