Japan posted a record trade deficit of ¥11.47 trillion ($112.07 billion) in 2013, up 65.3 percent from the previous year, as the weaker yen and growing demand for energy drove up import costs, dwarfing a sharp expansion in exports, the government said Monday.
The previous record deficit was ¥6.94 trillion, set in 2012, the Finance Ministry said in a preliminary report, adding the balance of trade in goods posted red ink for the third straight year for the first time since comparable data became available in January 1979.
Japan’s economic growth has been driven by investment of export earnings. But last year’s trade deficit underscores that the economy is no longer an export powerhouse and Prime Minister Shinzo Abe’s government has to carry out structural reforms to sustain economic growth, analysts said.
The value of imports jumped 15.0 percent to a record ¥81.26 trillion, up for the fourth straight year, as those of liquefied natural gas surged 17.5 percent and of crude oil 16.3 percent, the ministry said.
The value of exports soared 9.5 percent during the 12 months to ¥69.79 trillion, up for the first time in three years on the back of the yen’s depreciation, but still failed to outweigh imports.
The yen dropped versus the dollar by 21.8 percent from the year before on an average basis in 2013, due in part to the Bank of Japan’s pledge to maintain its aggressive monetary easing policy to achieve its inflation target of 2 percent, the ministry said.
A falling yen usually props up exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, though it pushes up import prices. Japan depends on imports for more than 90 percent of its energy needs.
Demand for natural resources has been growing from utilities bolstering fossil fuel-based power generation as an alternative to stalled atomic power amid the emergency at the Fukushima No. 1 nuclear power plant crippled by the March 2011 quake-tsunami disaster.
Given that import costs are expected to grow amid the yen’s slide and a prolonged nuclear power shutdown, “Japan’s trade deficit is likely to continue for an extended period,” said Koya Miyamae, senior economist of SMBC Nikko Securities Inc., said.
The 3-point sales tax hike to 8 percent in April is also boosting domestic demand before it kicks in, jacking up imports further and preventing the trade balance from turning positive, Miyamae added.
Chief Cabinet Secretary Yoshihide Suga admitted that swelling fossil fuel costs have affected the trade balance, saying the government will make efforts to reduce them, such as by promoting renewable energy and increasing imports of cheaper shale gas.
“Energy imports have been rising significantly since the nuclear accident, causing per capita costs of around ¥30,000 in Japan. It is important for us to ease such a burden as much as possible,” Suga said at a press conference.
He was mum, however, about whether Abe’s administration will soon try to get any nuclear reactors restarted.
Exports to China, Japan’s biggest trade partner, rose 9.7 percent to ¥12.63 trillion in 2013, while imports from China went up 17.4 percent to a record ¥17.65 trillion.
Exports to the EU gained 7.7 percent to ¥7.00 trillion, and imports from the region increased 15.2 percent to ¥7.65 trillion.
Japan’s shipments to the U.S., where the economy has been picking up, expanded 15.6 percent to ¥12.93 trillion, and imports rose 12.0 percent to ¥6.81 trillion.