Japan: Japan records its first annual trade deficit since 1980
January 26, 2012
In December, exports contracted 8.0% over the same month the previous year (November: -4.5% year-on-year), coming in slightly below the 7.4% contraction anticipated by the market. Meanwhile, imports grew 8.1% (November: +11.4% yoy), which was broadly in line with market expectations. As a result, the trade deficit narrowed from the JPY 688 billion (USD 8.9 billion) recorded in November to the JPY 205 billion (USD 2.6 billion) registered in December. The deterioration in exports was broad-based, as all of the major categories recorded losses, particularly in electrical machinery and transport equipment. On the other hand, mineral fuel purchases, which account for around a third of total imports, remained buoyant as Japan seeks to compensate for shortfalls in the nuclear power industry by importing fuel. Overall, in 2011, Japan recorded a trade deficit of JPY 2.5 trillion (USD 32 billion) mainly due to rising energy imports in the wake of the Fukushima disaster. Exports, on the other hand, deteriorated on the back of a loss of production capacity after the 11 March tsunami, a strengthening yen and cooling global demand. In fact, the 2011 trade deficit represents the first shortfall in the trade balance since 1980. Overall, in 2011, exports declined 2.7% (2010: +24.4% yoy) and imports expanded 12.0% (2010: +18.0% yoy).