Japan Has Surprise Deficit as Import Growth Beats Exports

Reuters

Reuters

Japan's trade balance unexpectedly fell into deficit in May on a strong rise in energy imports, even as overall exports and shipments to China, the US and Europe all rose by double digits.

Strong exports have buoyed Japan's moderate but stable growth.

Japan logged a surprise deficit of 203 billion yen ($1.8 billion), the first red ink in four months, according to data from the finance ministry, despite market expectations for a surplus.

Nagai said there was no need to be overly pessimistic over figures for a single month.

The data for May showed "a correction in speed" but the economy is likely to resume expansion in the July-September quarter, even if it stalls in the April-June quarter, he said.

Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance, told Bloomberg News that "exports are growing steadily and external demand is a leading factor in the Japanese economy".

Fresh data from Tokyo showed a 14.9% rise in exports from the country year-on-year for May, compared to the 16.1% Reuters-polled forecast.

The May deficit is "mainly because of a rise in imports, reflecting Japan's resilient economy", Minami said.

Exports of cars and vehicle parts rose partly because an natural disaster in Kumamoto previous year in May temporarily shut down production of these goods, Tonouchi noted.

The trade surplus with the United States was 411.1 billion yen ($3.71-billion) in May, up 19.0 per cent from the same period a year ago.

A large trade surplus could draw criticism from the Trump administration, which has repeatedly indicated that it prefers protectionist policies to reduce the USA trade deficit and increase exports.

Exports to China increased 23.9 per cent year-on-year in May, following a 14.8 per cent annual increase in April.

The Bank of Japan (BoJ) Governor, Haruhiko Kuroda, stated that inflation is still far from reaching the BoJ's 2.0% target and thus it is "inappropriate" to say how the central bank would exit its massive stimulus programme.

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