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Rising energy imports after last year’s earthquake and tsunami shut down most of the country’s nuclear plants saw Japan post a record current account deficit in January of $5.4 billion on Thursday.
Japan has reported a record current account deficit in January, due mainly to rising energy imports after last year’s earthquake and tsunami led to most of the country’s nuclear plants being shut down.
The shortfall – the sum of international trade and overseas investment flows – was 437.4 billion yen ($5.4 billion), the biggest monthly deficit since comparable data began to be recorded in 1985, the Financial Times reported.
Japan’s finance ministry said it was the first negative figure since January 2009, when the country recorded its previous record deficit of 132.7 billion yen at the height of the global financial crisis.
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However, other revised figures released Thursday by the country’s cabinet office showed that Japan’s economy shrank much less than had been thought at the end of 2011.
On an annualized basis, the economy contracted 0.7 percent in the three months to the end of December, far less than the preliminary 2.3 percent figure previously reported. Higher-than-estimated capital spending was the biggest factor in the revision, according to Bloomberg.
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According to the BBC, the yen slipped to trade at 81.26 to the US dollar Thursday, with Japan’s trade deficit fuelling concerns over how long the country would be able to manage its massive public debt.
Following the March 11 earthquake and tsunami last year, which set off a meltdown at the Fukushima nuclear reactor, Japan closed 52 out of 54 reactors, leading to fuel shortages for generating electricity and a consequent increase in fuel imports.
The current account deficit also grew as Japan’s exports sagged on a high yen and slow demand overseas.
However analysts insisted January’s figures were mainly dragged down by lunar new year holidays in key Asian markets, and said they expected the nation’s current account to return to surplus in February as exports to Asia pick up, the Agence France Presse reported.
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