Japan logs surprise trade deficit in May as energy costs expand

Japan logged a surprise deficit of ¥203 billion (RM7.7 billion), the first red ink in four months. — Reuters pic
Japan logged a surprise deficit of ¥203 billion (RM7.7 billion), the first red ink in four months. — Reuters pic

TOKYO, June 19 — Japan unexpectedly slumped back into a trade deficit for the first time in four months, as soaring energy import bills offset growth in the country’s shipments abroad, government data showed today.

Japan logged a surprise deficit of ¥203 billion (RM7.7 billion), the first red ink in four months, according to data from the finance ministry, despite market expectations for a surplus.

“Crude oil prices rebounded while the yen was weaker in the month,” Yuichiro Nagai, economist at Barclays Capital, told AFP.

The yen was 2.3 per cent weaker against the dollar compared with its year-before level, which helped push up imports costs.

The deficit came as a surprise after recent data showed Japan’s economy was picking up steam with exports growing on the back of a global economic recovery.

Nagai said there was no need to be overly pessimistic over figures for a single month.

May data showed “a correction in speed” but the Japanese economy is likely to continue to expand in the July-September quarter even if it stalls in April-June, he said.

Takeshi Minami, chief Japan economist at Norinchukin Research Institute, said exports were solid.

“Today’s report confirms that the shipments will continue to drive Japan’s economy in coming months, feeding gradually to capital spending and household spending,” he told Bloomberg News.

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 per cent 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.

But imports expanded faster, rising 17.8 per cent to ¥6.05 trillion, boosted by heavier costs for liquefied natural gas, coal and crude oil.

Japan’s dependence on fossil fuel has risen since the nation shifted to thermal power generation with most of the nation’s nuclear reactors remaining offline after the 2011 Fukushima earthquake/tsunami disaster. 

Japan’s politically sensitive surplus with the United States rose 19.0 per cent to ¥411 billion as exports increased 11.6 per cent.

US President Donald Trump has vowed to root out “unfair” trade practices around the world and target other countries including Japan.

The trade deficit with China shrank 22.4 per cent to ¥311.8 billion as exports grew 23.9 per cent. — AFP


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