TOKYO: Surging exports helped cut Japan’s trade deficit by more than half in January, data showed on Thursday, while falling oil prices also narrowed the gap by reducing the country’s huge post-Fukushima energy bills.
The monthly deficit of 1.18 trillion yen ($9.9 billion) was well down from 2.8 trillion yen a year ago—the worst on record for a single month—and came in below market expectations of a 1.68 trillion yen shortfall.
The upbeat finance ministry numbers — particularly the surging value of shipments to the US and China—come a day after the Bank of Japan pointed to a stronger export picture as it said the world’s number three economy was on the mend.
But weaker-than-expected growth data this week underscore the job ahead for Prime Minister Shinzo Abe’s growth blitz, which was called into question after a sales tax rise last year hammered consumer spending.
On Monday, official data showed Japan limped out of recession in the last quarter of 2014, with a tepid 0.6 percent expansion between October and December.
That followed two consecutive quarters of contraction, largely due to the levy rise, but economists had widely expected a stronger 0.9 percent expansion.
Over the full year the preliminary data showed zero growth, compared with 1.6 percent in 2013.
Japan’s “trade balance is highly likely to swing back into the black in February,” SMBC Nikko Securities said in a note after the data were published.
“We expect Japanese exports will continue to recover as the US economy expands.”
Overall exports grew for the fifth consecutive month, by 17.0 percent to 6.14 trillion yen—its strongest on-year result since late 2013—owing to strong shipments of cars and electronic goods, including semiconductor parts.
Shipments bound for the US market jumped 16.5 percent in value, while Chinese exports were up 20.8 percent from a year earlier.
Overall Imports fell 9.0 percent to 7.32 trillion yen, as the value of January crude oil purchases plunged 40.5 percent.
Buying of natural gas remained high, however, as resource-poor Japan fills a gaping energy gap after the 2011 Fukushima crisis forced the shutdown of nuclear reactors that once supplied more than one quarter of the country’s power.
A weaker yen also pushed up import costs, but falling oil prices—which are down by half since the summer—helped offset the impact.
“Export values and volumes both show signs of recovery, which bodes well for Japan’s economy,” Yuichi Kodama, an economist at Meiji Yasuda Life Insurance, told Bloomberg News.
“However, it will probably be difficult for Japan to return to a sustainable trade surplus as long as the nation continues to rely on imported energy.”