Japan sees first trade surplus in six years amid falling imports

Kyodo

Japan posted its first trade surplus in six years in 2016 as imports slumped on falling energy prices, the Finance Ministry said Wednesday. The surplus stood at ¥4.07 trillion ($35.76 billion).

The value of imports tumbled 15.9 percent to ¥65.97 trillion as crude oil and liquefied natural gas imports slid. Exports dropped for the first time in four years, down 7.4 percent to ¥70.04 trillion, as shipments of iron, steel and cars decreased.

The trade balance improved drastically from a deficit of ¥2.79 trillion in 2015.

Resource-poor Japan relies heavily on energy imports, particularly after the 2011 Fukushima nuclear disaster boosted demand for fossil fuels. Most of the country’s nuclear power plants remain out of commission.

For the whole of 2016, crude oil imports recorded a 32.4 percent drop from a year earlier, while LNG imports plunged 40.4 percent, the Finance Ministry said in a preliminary report.

Japan’s trade surplus with the United States, a major trading partner, shrank 4.6 percent to ¥6.83 trillion. U.S.-bound shipments fell 7.1 percent to ¥14.14 trillion and imports from the country slipped 9.3 percent to ¥7.31 trillion.

The latest data came amid growing worries about U.S. President Donald Trump’s protectionist stance on trade, although his promise to cut taxes and boost infrastructure spending has fed hopes for economic growth.

Trump has accused Japan and China of engaging in trade practices he called “not fair” to American companies, while singling out auto trade.

“The global economy has been supported by free trade … and we will have to see whether trade will decrease and lead to an economic slowdown globally,” a Finance Ministry official said.

The yen’s advance against the dollar ahead of Trump’s election win in November also played a role, as a strong yen reduces the value of exports. The dollar traded at an average value of ¥108.95 in 2016, down sharply from ¥121 the previous year.

Analysts also cite Trump’s trade policy and the yen’s moves as key factors to watch going forward.

“If we continue to see the dollar trading around current levels, say ¥113, it will likely start boosting the value of exports from this spring,” said Keisuke Okamoto, an economist at the Daiwa Institute of Research.

Okamoto said Trump taking aim at the auto industry was a concern, but added that more time is needed to gauge any impact on trade.

With China, Japan’s trade deficit shrank for the first time in six years. Exports dropped 6.5 percent to ¥12.36 trillion and imports were down 12.4 percent to ¥17.02 trillion, translating into a ¥4.65 trillion trade deficit.

Exports to the European Union were almost flat at ¥7.98 trillion and imports were down 5.7 percent to ¥8.14 trillion.

The figures were measured on a customs-cleared basis.

In December alone, Japan reported a ¥641.43 billion trade surplus for the fourth straight month in the black.

Dragged down by a sharp drop in the value of LNG imports, total imports fell 2.6 percent to ¥6.04 trillion and exports grew 5.4 percent to ¥6.68 trillion, the first rise in 15 months, helped by growth in auto parts shipments.

Exports to China expanded to a record-high ¥1.30 trillion in the reporting month, lifted by auto and electronics parts.