Japan unexpectedly slumped back into a trade deficit for the first time in four months, as soaring energy import bills offset growth in shipments abroad, government data showed Monday.
A surprise deficit of ¥203 billion ($1.8 billion) logged the first red ink in four months, according to Finance Ministry data, despite market expectations for a surplus.
“Crude oil prices rebounded while the yen was weaker in the month,” said Yuichiro Nagai, economist at Barclays Capital.
The yen was 2.3 percent weaker against the dollar compared with a year earlier, and this helped push up import costs.
The deficit came as a surprise after recent data showed the economy was picking up steam, with exports growing on the back of a global economic recovery.
Nagai said there was no need to be too pessimistic over a single month’s figures.
The data for May showed “a correction in speed” but the economy is likely to resume expansion in the July-September quarter, even if it stalls in the April-June quarter, he said.
Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance, said that “exports are growing steadily and external demand is a leading factor in the Japanese economy.”
The report “confirms that the shipments will continue to drive Japan’s economy in coming months, feeding gradually to capital spending and household spending,” said Takeshi Minami, chief Japan economist at Norinchukin Research Institute.
The May deficit is “mainly because of a rise in imports, reflecting Japan’s resilient economy”, Minami said.
Overall, exports in May rose 14.9 percent from a year earlier to ¥5.85 trillion, thanks to an increase in shipments of cars and steel, chalking up growth for the sixth consecutive month.
The growth in exports is partly thanks to a rebound from the powerful quakes in Kyushu last year that disrupted corporate production and supply chains.
But imports expanded faster, rising 17.8 percent to ¥6.05 trillion, boosted by heavier costs for liquefied natural gas, coal and crude oil.
The dependence on fossil fuels has risen since the nation shifted back to thermal power generation in light of the Fukushima nuclear crisis, which led to most of its nuclear reactors being taken offline.
Japan logged a surplus with the United States rose 19.0 percent to ¥411 billion as exports climbed 11.6 percent.
This may remain a politically sensitive issue, as U.S. President Donald Trump has vowed to root out “unfair” trade practices around the world and target countries, including Japan.
Japan’s trade deficit with China narrowed 22.4 percent to ¥311.8 billion as exports grew 23.9 percent.
Prime Minister Shinzo Abe has been trying for years to fire up growth and end an extended period of on-and-off deflation through a policy blitz of easy money, stimulus and reform.
Despite the upward trend in the economy, consumer prices remain below the Bank of Japan’s 2-percent inflation target.