Japan’s trade deficit smashes record, topping $26.1 billion

Bloomberg

Japan’s trade deficit surged to a record in January, as one-off factors including the lunar new year holidays dragged on exports amid a backdrop of a slowing global economy.
The trade gap jumped to ¥3.5 trillion ($26.1 billion) from ¥1.45 trillion in December, topping ¥3 trillion for the first time in comparable data going back the late 1970s, the finance ministry reported. The deficit far exceeded the previous record, although it was smaller than analysts’ estimates.
Export growth slowed sharply to 3.5%, with chip-making equipment among the largest drags, in a sign of weakening global tech-sector demand. The value of shipments to China sank 17.1%, dragged down by cars, auto parts and chip machinery. Exports to the US and Europe also grew at a weaker pace of 10.2% and 9.5% respectively.
Imports meanwhile continued to show double-digit gains with a 17.8% increase from a year ago, as costly energy shipments continued to inflate the import bill. Japanese firms also likely tried to secure inventory from China before lunar new year celebrations.
The record deficit casts a cloud over Japan’s economy, as it struggles for recovery momentum with a new Bank of Japan governor set to take over from Haruhiko Kuroda and his decade of monetary easing. While one-off factors contributed to the deficit, the government and the central bank will need to keep a close eye on how much growth is slowing abroad.
“Japan’s exports are unlikely to show a strong pickup so the overall economy will probably continue to have a lackluster recovery,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “That will be a headache for the BOJ when they consider normalisation.”