Econintersect: On the heels of a disappointing GDP number 3 days ago, it should not be surprising that Japan recorded the largest trade deficit in its history for January 2014. The GDP report was dragged down by an outsized increase in imports accompanied by a weak number for exports. The unprecedented trade deficit amounts to ¥2.79 trillion (US $27.4 billion). The driving factor in the huge deficit came from energy imports which have risen over the last three years as Japan shut down its extensive nuclear power industry following the Fukushima disaster, the earthquake and tsunami destruction of a nuclear power plant which has still not been stabilized by all reports.
The increase in fuel usage in winter weather has been especially damaging this year because the yen is now about 18% lower against the U.S. dollar than a year ago. Fossil fuel imports are priced in dollars. The weaker yen, which should increase exports, has nit had an offsetting affect with a slow recovery in the U.S. and an even slower one in Europe. These are two of Japan's leading export markets. Japan's exports to China also declined in January as the Middle Kingdom celebrated the Chinese New Year. The Japanese trade deficit with China was its largest for any country and was only slightly below the deficit for the entire Middle East.
Jon Authers has an acerbic commentary from the Financial Times in the following video:
- Value of Exports and Imports January 2014 (Provisional) (Japan Ministry of Finance, 20 February 2014)
- Japan Trade Deficit Swells to Record as Import Costs Surge (Paul Panckhurst, Bloomberg)
- Japan trade deficit hits record high (Jonathan Soble, Financial Times, 20 February 2014)
- Japan GDP Falters (GEI News, 17 February 2014)