Japan is likely to post a record trade deficit in fiscal 2013 because the weaker yen and soaring demand for energy have driven up the cost of importing fossil fuels, according to a projection by a trade business group.
The deficit is expected to expand to ¥12.1 trillion during the year through next March, much worse than the ¥8.18 trillion in fiscal 2012 and the largest since comparable data became available in fiscal 1979, the Japan Foreign Trade Council Inc. said Thursday.
The economy will log a trade deficit for the third straight year, according to the organization, which is composed of companies involved in international trade activities.
Exports in fiscal 2013 are forecast to rise 9.8 percent from the previous year to ¥70.18 trillion, sustained by the yen’s fall, while imports are expected to climb 14.1 percent to ¥82.28 trillion, JFTC said.
A sliding yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, but it also increases import prices. Japan depends on imports for more than 90 percent of its energy needs.
Imports may remain on an upward trend as demand for gas and oil will continue to be robust, with utilities bolstering fossil fuel-based power generation as an alternative to nuclear power since the 2011 start of the Fukushima disaster, analysts said.
The hike in the consumption tax to 8 percent next April could ignite domestic demand later this fiscal year, also pushing up imports further and preventing the trade balance from turning positive, they added.
By volume, exports in fiscal 2013 are likely to grow 0.7 percent on year, and imports are forecast to gain 0.9 percent.
JFTC projects a trade deficit of ¥10.71 trillion in fiscal 2014.