TOKYO, Japan – The world’s 3rd largest economy logged a record trade deficit in 2012 as exports to debt-hit Europe plunged and a bitter diplomatic spat with its biggest trade partner China weighed on demand.
Official figures from the finance ministry showed Japan’s trade shortfall in 2012 totaled 6.92 trillion yen ($78 billion), with the deficit in December alone standing at a higher-than-expected 641.5 billion yen.
The data marked a second consecutive annual trade deficit. For 2012, Japan’s exports totaled 63.7 trillion yen against imports of 70.7 trillion yen.
The gloomy numbers spell more bad news for Japan as it struggles to cement a recovery after the 2011 quake-tsunami, the worst nuclear crisis in a generation and the impact of an export-denting strong yen.
And the figures underscore the size of the task ahead for the new government, led by the hawkish Shinzo Abe, who campaigned on a pledge to turn around Japan’s fortunes with big public spending and by pressuring the nation’s central bank for more aggressive monetary policy.
“We see 2012 as the worst and the trade account could improve slightly in 2013, although there is a long way to go before we have a trade surplus,” Minori Uchida, chief forex analyst at the Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.
While Japan ran a 2012 trade surplus with the United States, it recorded an annual deficit of 139.7 billion yen with the European Union, its first as the continent’s sovereign debt crisis crippled demand for everything from Japanese televisions to cars.
Tokyo’s deficit with China doubled to a record 3.52 trillion yen, as an East China Sea islands feud and subsequent consumer boycott of Japanese goods hammered demand.
The dispute with China flared in September after Tokyo nationalised the Senkakus, which Beijing refers to as the Diaoyu islands.
It sparked a diplomatic row, huge anti-Japan protests across China and a consumer boycott that weighed heavily on China sales of well-known Japanese brands, including those of top automakers Toyota, Nissan and Honda.
On Tuesday, the under-pressure Bank of Japan adopted a 2% inflation target in a bid to beat the deflation that has haunted the economy for years, and set out plans for indefinite monetary easing, moves widely seen as a bow to the new powers in Tokyo.
Markets have cheered Abe’s policies, sending the benchmark Nikkei 225 stock index soaring in the past couple of months, while easing speculation has helped push down the value of the yen.
That is good news for Japan’s exporters, who have complained about the unit’s soaring value since it hit a record around the 75-level against the dollar in late 2011. A high yen makes products less competitive overseas.
The dollar bought 88.53 yen in Tokyo forex trade Thursday, January 24.
All but two of Japan’s 50 nuclear reactors remain offline after the atomic crisis at Fukushima, which has seen Japan’s energy bills soar as it turned to pricey fossil-fuel alternatives to plug the gap.
Japan’s economy contracted in July-September 2012 and slipped slightly in the previous 3 months, meeting the technical definition of a recession. – Rappler.com
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