TOKYO, Feb 7 Japan is on track to post a record
trade deficit in January, preliminary data showed on Friday, in
a warning sign that consistently weak export demand could weigh
on economic growth.
The data also provide further evidence that a weak yen is
doing more to push up import costs than it is to boost exports
as many Japanese manufacturers have shifted factories overseas.
A record trade deficit would also suggest that overseas
demand may not be strong enough to offset the negative impact of
a scheduled sales tax increase in April.
"It may be difficult to expect consumption to continue to
lead growth as wages will not rise as fast as prices," said
Norio Miyagawa, senior economist at Mizuho Securities Research &
"If external demand doesn't pick up, the overall trend for
growth would weaken."
For the first 20 days of January, Japan's trade deficit was
2 trillion yen ($19.6 billion), data from the finance ministry
showed on Friday.
That would put it on track to surpass the current record
high deficit, which was 1.6 trillion yen in January 2013. The
finance ministry will release trade data for all of January on
Exports rose 11.3 percent in the first 20 days of January,
compared with the same period a year ago. Imports, however,
jumped an annual 30.2 percent.
The yen has fallen around 23 percent versus the
dollar since late 2012 as Prime Minister Shinzo Abe's government
embarked on a bold plan to end 15 years of deflation with
expanded quantitative easing from the Bank of Japan.
The yen's decline has helped consumer prices rise as it
pushes up import costs, which is contributing toward reaching
the Bank of Japan's 2 percent inflation target.
Many in the government also expected the yen's fall to boost
exports, but this has largely failed to materialise as Japanese
companies are producing more goods outside of the country.
Growing signs of weakness in emerging market countries has
also raised concerns that demand for Japanese exports could
The economy is likely to boom until March as consumers rush
to beat the sales tax hike, and many analysts agree with the
BOJ's view that the pain from the higher tax will be temporary.
However, weak exports could mean that the rebound is slower
than some economists anticipate.