TOKYO: Japan’s trade deficit quadrupled on-year in March to $14 billion, data showed Monday, with a weak yen compounding surging imports as consumers rushed to buy ahead of a rise in sales tax.
Japan imported 1.45 trillion yen ($14 billion) worth of goods more than it exported in the month, the finance ministry said, compared with a shortfall of 356.9 billion yen in March 2013.
Exports rose 1.8 percent to 6.38 trillion yen, thanks to higher shipments of cars and processed fuel products.
But imports grew a much faster 18.1 percent to 7.83 trillion yen due to higher imports of crude oil and liquefied natural gas as resource-poor Japan raced to plug its energy gap.
For the fiscal year to March, Japan logged a record largest trade deficit of 13.75 trillion yen.
A 17.3 percent rise in imports from a year earlier to 84.61 trillion yen caused by post-Fukushima energy bills overwhelmed a 10.8 percent jump in exports to 70.86 trillion yen, according to data issued by the finance ministry.
Junko Nishioka, chief economist at RBS Securities Japan, attributed the jump in imports to expectations for a last-minute surge in consumer spending before the April 1 sales tax hike.
Compared with before the March 2011 disaster, “a weaker yen hasn’t increased export volume as much as it used to,” she said.
“That is to say Japanese firms aren’t as competitive as before,” she told Dow Jones Newswires.
“It remains difficult for exports to recover even if overseas economies improve. There is a risk of increasing imports and ballooning trade deficits,” she said.
Energy import needs soared after the 2011 Fukushima crisis forced the shutdown of
Japan’s nuclear reactors, which once supplied a third of the nation’s power.
A sharp decline in the yen, while good for exporters’ profitability, has also forced up the cost of importing.
The yen was an average 8.7 percent cheaper against the dollar in March compared with the year-before level, according to customs data.
Japanese domestic demand for gasoline and other products also picked up in March ahead of the April 1 sales tax hike from 5.0 percent to 8.0 percent.