Japan Economy: New Record Trade Deficit in January 2013 February 2013

Japan Economy: New Record Trade Deficit in January 2013 – February 2013

British Embassy Tokyo


Japan’s trade deficit increased to 1.63 trillion yen (£11 billion) in January – a new monthly record. The recent fall in the Yen is beginning to be reflected in government statistics.


Japan’s trade balance in January 2013 recorded its largest monthly deficit since 1979 when comparable trade statistics began. By value, exports increased on a nominal basis (by 6.4%) for the first time in 8 months. Exports to Asia (including China) improved. However, in real terms (by volume) exports continued to fall – by 6%, the eighth monthly decline. And the increase in exports by value was more than outweighed by an increase in the value of imports (particularly fuel).

The yen fell slightly after the release of these figures. But the markets have been paying more attention in recent days to public debate on whether the BoJ should be able to buy foreign bonds. This was floated by PM Abe on 18 February – causing further falls in the yen – but has since been repeatedly ruled out by Finance Minister Aso in line with recent G7/G20 statements.


The recent depreciation in the Yen is beginning to be reflected in government figures. Even though the value of Japan’s exports increased – benefiting from increased prices (Japan’s export price index has increased by 13.1% over a year) – this was more than offset by the increased value of imports. They show that Japanese firms still have a way to go before they are able to export their economy to a recovery.

Decisions over the possibility of US exports of LNG to Japan and restarting Japanese nuclear reactors would both improve Japan’s trade deficit. These issues are likely to be raised by PM Abe during his visit to the USA this week. In the longer term, if current trends were to continue, the sustainability of Japan’s government bond markets could be called in to question as the risk of more foreign capital required to finance Japan’s  debts in future increases.


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Countries: Japan
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