Japan's trade deficit extended to a record-equaling 14 months in August, as the yen's slide and growing demand for energy continued to push up fossil fuel import costs, dwarfing the fastest growth in exports in three years, the government said Thursday.
The 960.3 billion yen deficit in the goods trade balance was the biggest for the month of August and the sixth largest for any month since comparable data became available in January 1979, the Finance Ministry said in a preliminary report.
It was the first time Japan's trade balance had recorded 14 straight months of red ink since the period from July 1979 to August 1980, when the country had been hit by the second oil shock, a ministry official briefing reporters said.
The value of imports rose 16.0 percent year on year to 6,744.0 billion yen in August, up for the 10th straight month, as those of crude oil jumped 27.2 percent, the ministry said.
With the yen sliding, exports increased for the sixth month in a row, up 14.7 percent to 5,783.7 billion yen and posting their sharpest growth since August 2010, but still failed to outweigh imports, the report showed.
In August, the yen dropped against the U.S. dollar by 25.4 percent from a year earlier to average 98.44 yen, the ministry said.
A falling yen usually supports exports by making Japanese products cheaper abroad and raises the value of overseas revenues in yen terms, but it hoists import prices. Japan depends on imports for more than 90 percent of its energy needs.
Japan's trade balance is unlikely to turn positive soon as demand for gas and oil will stay robust from utilities boosting fossil fuel-based power generation as an alternative to nuclear power following the 2011 accident at the Fukushima Daiichi power plant, analysts said.
Crude oil prices have been on an uptrend across the globe amid intensifying political unrest in the Middle East, which may drive up import costs further, they added.
"We have to carefully watch future developments of the trade balance, as growth in imports of crude oil and liquefied natural gas is expected to continue to greatly affect it," the Finance Ministry official said.
Some economists, however, take an optimistic view of Japan's trade conditions, given a recent strong recovery in exports on the back of the yen's depreciation, triggered by Prime Minister Shinzo Abe's policies dubbed "Abenomics" entailing drastic monetary easing.
"As exports grow, Japan's trade deficit is likely to shrink gradually," said Mitsumaru Kumagai, chief economist at the Daiwa Institute of Research.
Shipments to China, Japan's biggest trade partner, rose 15.8 percent to 1,119.0 billion yen in August, while imports from China went up 17.6 percent to 1,423.1 billion yen.
Exports to the European Union gained 18.0 percent to 564.5 billion yen, and imports from the region increased 11.2 percent to 638.3 billion yen.
Japan's shipments to the United States, where the economy has been picking up, soared 20.6 percent to 1,069.5 billion yen, and imports rose 14.0 percent to 574.2 billion yen.
The figures were measured on a customs-cleared basis.