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Japan logs $8.1 billion trade deficit in February

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(Globalpost/GlobalPost)

Japan logged another trade deficit in February, this time of $8.1 billion according to data released Thursday, reversing a year-earlier surplus and underscoring the uncertain state of the world's third-largest economy.

The figures also highlight the size of the task ahead for Prime Minister Shinzo Abe's government, which has pledged to turn around Japan's fortunes with big public spending and by pressuring the nation's central bank for more aggressive monetary policy.

The trade figures come as a new management team is installed at the Bank of Japan, stoking speculation of more easing measures aimed at stoking the limp economy.

Japan's 777.5 billion yen deficit in February reversed a surplus of 25.9 billion yen in the same month a year earlier, finance ministry data showed.

Total exports during the period slipped 2.9 percent to 5.28 trillion yen while imports jumped 11.9 percent to 6.06 trillion yen.

The jump in imports was largely due to Japan's soaring energy costs. All but two of 50 nuclear reactors remain offline after the 2011 atomic crisis at Fukushima, which forced Tokyo to turn to pricey fossil-fuel alternatives.

The yen's recent weakening was expected to help Japan's hard-hit exporters although the trade picture remains cloudy after Tokyo logged its worst-ever monthly trade deficit of 1.63 trillion yen in January.

Japan also posted a record annual trade deficit through 2012 as exports to debt-hit Europe plunged and a bitter diplomatic spat with its biggest trade partner China weighed on demand.

Exports to China in February dropped 15.8 percent, partly due to the territorial spat and also the effect of the Chinese Lunar New Year holiday.

Shipments to debt-hit Europe, a key market for Japanese products, tumbled 9.6 percent, while exports to the US market climbed 5.7 percent from a year earlier.

Tokyo's trade with Beijing was hit hard after as an East China Sea islands feud and subsequent consumer boycott of Japanese goods hammered demand.

The dispute with Beijing 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.

Japan's overall economic picture remains uncertain. But the nation squeaked out of recession in the last quarter of 2012 with modest growth that, analysts say, would provide a foundation for a strengthening economy.

The 0.2 percent rise in GDP on an annualised basis in the quarter to December was welcome news for Abe, whose first few months in office have seen renewed optimism over the state of the economy.

Markets have cheered his 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 was trading near the 96 yen level in Thursday trade.

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http://www.globalpost.com/dispatch/news/afp/130320/japan-logs-81-billion-trade-deficit-february-0