Japan Reduces Deficit But Energy Imports Still Rising

Japan posted a goods trade deficit of 964.0 billion yen in July, down from a year earlier as exports grew for the first time in three months but still a record 25th straight month of red ink, as fossil energy imports continued to rise amid the prolonged halt of nuclear power plants, the government said Wednesday.

The deficit shrank 6.6 percent with the value of exports increasing 3.9 percent to 6,188.6 billion yen, as those of automobiles and metal processing products gained 8.1 percent and 35.7 percent, the Finance Ministry said in a preliminary report.

Imports grew 2.3 percent to 7,152.6 billion yen, up for the second straight month, with petroleum products surging 23.3 percent and liquefied natural gas climbing 7.4 percent, the ministry said.

The net outflow of money from Japan has continued for more than two years, the longest period since comparable data became available in January 1979, as utilities have been bolstering fossil fuel-based power generation as an alternative to stalled nuclear power in the wake of the Fukushima nuclear disaster in March 2011.

Japan depends on imports for more than 90 percent of its energy needs.

The nation’s trade balance will not turn positive soon, given that imports may grow further with domestic demand recovering after an economic downturn triggered by the 3-percentage-point consumption tax hike to 8 percent from April 1, analysts said.

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