Asia Economy
Japan's trade deficit rose sharply in March
By Finfacts Team
Apr 22, 2014 - 7:43 AM

Japan's trade deficit rose sharply in March, quadrupling in the month as export growth slowed and energy imports continued to rise.

While some of the rise was due to a temporary factor: the increase in the sales tax rate by 3% to 8%, triggering an increase in imports to meet higher spending ahead of the April 1 deadline, but exports also fell.

The trade gap grew by more than two-thirds in the 12 months through March, to ¥13.7tn ($134bn), according to finance ministry data released on Monday. It was the third consecutive fiscal year of deficits.

The data on Monday shows that exports grew only 1.8% from the year before, despite a 9% drop in the yen against the dollar.

Regional figures show that exports fell 12.5% to Thailand, 7.2% to Indonesia and 6.2% to South Korea.

Stripping out the effects of the weaker yen, exports dropped 2.5% in volume terms, the biggest fall in nine months. Export volumes fell to all regions except the US.

The Wall Street Journal reports that with imports being pushed up by spending ahead of the April 1 sales tax rise, the trade gap surged to ¥1.45tn ($14bn) in the month of March. The figure was the largest ever for the month and marked a record 21 straight months of shortfalls.

Bloomberg reports that Japan’s ruling Liberal Democratic Party is considering loosening restrictions on lenders to make it easier for small businesses to procure funds, the Nikkei newspaper reported on April 19.

While department store sales in March soared the most since at least 1991, Abe now has to ensure domestic demand doesn’t tail off with shoppers having to pay more for goods because of the higher sales levy.

Consumer confidence fell in March for a fourth straight month to 37.5, down from 45.7 in May last year -- the highest point during Abe’s current term as prime minister.

The economic policy of the government of Shinzo Abe, Japan's prime minister, comprising massive money printing (bond buying) by the Bank of Japan and structural reforms, in recent months has been losing steam.

It is called Abenomics [pdf]