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Japan’s trade deficit soars despite export hike

Japan’s trade deficit soars despite export hike

TOKYO: Japan’s trade deficit has swelled in January to record limit, as data has showed. The ¥ 2.79 trillion ($ 27.3 billion) shortfall also underscored a boost in purchases of foreign goods ahead of an April sales tax rise, analysts said, as fears grow that the hike will derail a recovery in the world’s third-largest economy.

Japan’s yawning deficit marked the latest worries after its GDP growth in the first half of last year slowed down as it posted a record trade deficit through 2013. The yen has lost about a fifth of its value against the dollar since late 2012.

While the weaker currency boosts Japanese exporters’ profitability, it also makes goods purchased from overseas more expensive. The growing imbalance was stoked by a 25% jump in January imports to a record ¥ 8.04 trillion on pricey bills for oil and gas purchases, after Japan shuttered its nuclear reactors in wake of the worst atomic crisis in a generation at Fukushima in 2011.

But the monthly volume of energy imports has been slowing, with January’s rise also driven by stronger spending ahead of the tax rise, which is seen as crucial to bringing down Japan’s national debt, said London-based Capital Economics.

Exports rose 9.5% to ¥ 5.25 trillion. Japan’s January exports to Europe rose 20.2% from a year earlier, while they were up 21.9% to the US and 13.1% to China.

Despite upbeat exports to key markets in the US, China and Europe, Japan’s January deficit ballooned by 70.8% from a year earlier and was equal to about one-quarter the country’s trade deficit through all of 2013.