Japan Trade Deficit Shrinks in April

Japan’s goods trade deficit shrank in April for the first time in 20 months, the government said Wednesday, underscoring that the first consumption tax hike in 17 years weighed on domestic demand and reduced the pace of import growth.

The country’s trade deficit stood at 808.9 billion yen last month, registering the 22nd straight month of red ink but contracting 7.8 percent from a year earlier, the Finance Ministry said in a preliminary report.

The value of imports rose 3.4 percent to 6,878.1 billion yen, up for the 18th consecutive month, with those of liquefied natural gas soaring 11.0 percent. The pace of growth was much smaller than the 18.1 percent increase in March.

The volume of imports fell 1.3 percent in April, suggesting the depreciation of the yen has resulted in Japan paying a higher amount for fewer goods.

Exports climbed for the 14th month in a row, up 5.1 percent to 6,069.2 billion yen, as car shipments were healthy and the yen dropped against the U.S. dollar by 6.7 percent year on year to 102.43 yen in the reporting month, but still failed to surpass imports.

A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, though it drives up import prices. Japan depends on imports for more than 90 percent of its energy needs.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza