TOKYO — Japan logged its 23rd successive month of trade deficits in May, as exports and imports both declined despite signs of recovering demand in the U.S. and Europe.
The deficit in May was 909 billion yen ($8.8 billion), the Finance Ministry reported, as exports to the U.S. fell by nearly 3 percent from a year earlier. Exports fell 2.7 percent to 5.6 trillion yen ($54.9 billion) while imports dropped 3.6 percent to 6.5 trillion yen ($63.7 billion)
Japan began running deficits after its nuclear plants closed following the disaster at the Fukushima Dai-Ichi plant in 2011, initially leading to higher imports of crude oil and gas to offset the lost generation capacity. Imports of fuel and other raw materials fell 9 percent in May from a year earlier, but exports of mainstay products such as cars and electronics also weakened or were flat.
The trade deficit is expected to narrow in coming months as imports fall following a tax hike in April. May’s decline in year-on-year terms was the first since October 2012.
The impact of a sharp weakening in the value of the Japanese yen has been exhausted, having failed to significantly boost exports while sharply increasing costs for imports, especially of oil and gas.
The Japanese yen is now trading around 102.2 yen to the U.S. dollar, after hitting a peak of nearly 105 yen to the dollar in January.
Meanwhile, the volume of oil and gas imports has moderated thanks to energy conservation since the March 2011 earthquake, tsunami and nuclear disasters.
Japan’s exports have risen only moderately, partly due to the shift of many manufacturers overseas to help cut costs and move closer to faster growing emerging markets.
A recalibration of supply chains in many markets, as manufacturers fine-tune their operations to reduce costs is also sapping momentum from the recovery in trade, says Adam Slater, a senior economist at Oxford Economics.
“So the outlook remains for moderate growth only, with our forecast for world trade growth to achieve its long-term rate only by the end of next year,” he said in a commentary.