Japan posted a record current account deficit as energy imports surged
The deficit - the sum of trade and investment flows - was Y437B ($5.4B)
Japan posted a record current account deficit in January, as energy imports surged because of nuclear plant shutdowns following last year’s earthquake and tsunami.
The deficit – the sum of trade and investment flows – was Y437bn ($5.4bn), the Ministry of Finance said on Thursday. That is the biggest monthly deficit since comparable data began in 1985.
January data tends to be volatile, because of the changing timing of Chinese New Year, which depresses exports all over Asia. This year the holiday started on January 23; last year it began on February 3. On a seasonally-adjusted basis, the current account showed a surplus of Y116bn in January, much reduced from the Y776bn seasonally-adjusted surplus in December. That, too, was a record low since 1985.
“January is prone to trade deficits, and there were magnifying factors this year,” wrote Chiwoong Lee, economist at Goldman Sachs in Tokyo, in a note to clients.
The data may increase pressure on Japan to restart its nuclear reactors, all but two of which are now shut down either for maintenance or safety checks.
It may also increase pressure on the Bank of Japan to keep easing monetary policy at its meeting next week. Last month the BoJ expanded its asset-purchasing programme while adopting a firmer “goal” of consumer price inflation at 1 per cent. The yen has weakened 5 per cent against the dollar since then, improving corporate profits and domestic risk appetite.
“The important message from the BoJ’s [policy meeting] next week is that the monetary easing in February is not a one-off, but the beginning of [a] series of easing [measures] that we will see in coming months,” wrote Masaaki Kanno, chief economist at JP Morgan in Tokyo, in a note to clients.