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Japan’s current-account deficit widened to a record in November as imports climbed, underscoring challenges for Prime Minister Shinzo Abe as he tries to drive a sustained economic rebound.
The 592.8 billion yen ($5.7 billion) shortfall in the widest measure of trade, reported by the Ministry of Finance in Tokyo Tuesday, was larger than the median forecast of 368.9 billion yen in a Bloomberg News survey of 24 economists. The deficit is the biggest in comparable data back to 1985.
Weakness in the yen and extra demand for energy because of nuclear-plant shutdowns are driving up Japan’s import bill, highlighting drags on the recovery that will also include a sales-tax increase in April. A longer-term risk for the nation is any shift to a sustained deficit that would undermine investor confidence in Japanese government debt.
“The record deficit reflects a change in Japan’s current economic make-up” with its lack of nuclear power and a weaker yen, said Junko Nishioka, chief Japan economist at Royal Bank of Scotland Group Plc in Tokyo, adding that the shortfalls in the balance may provide further cause for the yen to fall.
Japanese stocks fell as markets in Tokyo reopened after a three-day weekend in which the yen climbed against the dollar. The yen slipped about 0.4 percent to 103.46 per dollar as of 11:26 a.m. in Tokyo, down about 13 percent in the past 12 months.
Tuesday’s numbers underscore the risk that Japan could switch in coming years to becoming a deficit nation that needs funding from abroad to service a debt burden that is more than twice the size of the economy. For now, a surplus in income from overseas is preventing such a shift.
“We have to take this problem seriously and solve the underlying causes,” Economy Minister Akira Amari told reporters after the release. “Japan would have to depend on foreign investment to finance its budget shortfall if it allows its current-account balance to remain in deficit.”
Naohiko Baba, an economist at Goldman Sachs Group Inc. in Tokyo, says that export volumes and wages will be key economic indicators in a “critical year for Abenomics.” Growth in shipment volumes as a result of weakness in the yen is weaker than “would be expected by the market so far,” Baba said in a note Monday. (Bloomberg)
The 592.8 billion yen ($5.7 billion) shortfall in the widest measure of trade, reported by the Ministry of Finance in Tokyo Tuesday, was larger than the median forecast of 368.9 billion yen in a Bloomberg News survey of 24 economists. The deficit is the biggest in comparable data back to 1985.
Weakness in the yen and extra demand for energy because of nuclear-plant shutdowns are driving up Japan’s import bill, highlighting drags on the recovery that will also include a sales-tax increase in April. A longer-term risk for the nation is any shift to a sustained deficit that would undermine investor confidence in Japanese government debt.
“The record deficit reflects a change in Japan’s current economic make-up” with its lack of nuclear power and a weaker yen, said Junko Nishioka, chief Japan economist at Royal Bank of Scotland Group Plc in Tokyo, adding that the shortfalls in the balance may provide further cause for the yen to fall.
Japanese stocks fell as markets in Tokyo reopened after a three-day weekend in which the yen climbed against the dollar. The yen slipped about 0.4 percent to 103.46 per dollar as of 11:26 a.m. in Tokyo, down about 13 percent in the past 12 months.
Tuesday’s numbers underscore the risk that Japan could switch in coming years to becoming a deficit nation that needs funding from abroad to service a debt burden that is more than twice the size of the economy. For now, a surplus in income from overseas is preventing such a shift.
“We have to take this problem seriously and solve the underlying causes,” Economy Minister Akira Amari told reporters after the release. “Japan would have to depend on foreign investment to finance its budget shortfall if it allows its current-account balance to remain in deficit.”
Naohiko Baba, an economist at Goldman Sachs Group Inc. in Tokyo, says that export volumes and wages will be key economic indicators in a “critical year for Abenomics.” Growth in shipment volumes as a result of weakness in the yen is weaker than “would be expected by the market so far,” Baba said in a note Monday. (Bloomberg)
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Articles by Korea Herald
