Econintersect: Japan has reported a surprise increase in its trade balance deficit to nearly ¥1.3 trillion (U.S. $ 12.5 billion) for the month of November 2013. The deficit in trade was so large that it created the first current account deficit for japan after eight consecutive months of surplus. The November current account deficit was ¥128 billion. In addition to the balance of trade the current account includes also includes net factor income (such as interest and dividends) and net transfer payments (such as foreign aid and net foreign direct investment).
A significant part of the positive current account flow for Japan is the approximately ¥286 billion (U.S. $2.75 billion) in interest payments on the $1.1 trillion of U.S. Treasury debt that the country owns. Large as this is, though, it amounts to only 26% of the total net positive current account flow from sources other than trade.
Trading Economics provides the following historical data:
The following table from the Japanese Ministry of Finance shows the summary for November with a comparison to the same month in 2012. It can be seen that a growth in imports greater than the growth in exports has combined to create a trade balance deficit 35% larger for November 2013 than for the same month a year ago.
Click on graphic for larger image.
Energy costs are blamed for most of the increasing import total as Japan is buying fossil fuels with yen that is more than 20% lower vs. the U.S. dollar than it was a year ago. Most international trade in energy is conducted in dollars.
Sources:
- Trade Statistics (Japan Ministry of Finance, 18 December 2103)
- Japan Balance of Trade (Trading Economics, 19 December 2013)
- Japan Current Account (Trading Economics, 19 December 2013)
