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Trade deficit in May was the third-highest ever recorded

Kyodo

Japan’s trade balance in May showed the third-largest deficit ever for any month, with the red-ink streak extending to a record 11th month as the depreciation of the yen continued to push up import prices despite a sharp gain in exports, the government said Wednesday.

The ¥993.9 billion deficit in the goods trade balance was the biggest for the month of May since officials began compiling comparable data in fiscal 1979, the Finance Ministry said in a preliminary report.

The value of imports rose 10 percent year on year to ¥6.76 trillion, up for the seventh straight month, as crude oil imports climbed 6.4 percent and liquefied natural gas went up 8.2 percent.

With the yen weakening steeply, exports jumped 10.1 percent to ¥5.77 trillion, up for the third month, but still failed to outweigh imports, the report says.

The ministry said the yen dropped against the dollar by 23.4 percent from a year earlier in May.

Exports could gain steam, but the trade balance is unlikely to turn positive soon as demand for gas and oil will stay robust from utilities compensating for the shutdown of all their nuclear plants, analysts said.

The planned consumption tax hikes to 10 percent by 2015 could also ignite domestic demand later this fiscal year, which would drive up imports further, they added.

The trade deficit “is likely to persist until the middle of fiscal 2014″ through March 2015, said Takeshi Minami, chief economist at Norinchukin Research Institute.