February 20, 2013 / 12:51 AM / in 5 years

UPDATE 1-Japan monthly trade deficit hits record as imports jump

* Jan trade deficit a record 1.6 trln yen on rising imports
    * Jan exports +6.4 pct yr/yr vs f'cast +5.6 pct
    * Jan imports +7.3 pct yr/yr vs f'cast +1.6 pct
    * PM Abe under pressure to boost economy

    By Kaori Kaneko
    TOKYO, Feb 20 (Reuters) - Japan's trade deficit widened to a
record in January as energy imports rose more than expected,
highlighting one of the risks  of seeking to revive the
country's export engine through pursuing policies that could
weaken the currency.
    The trade deficit reached a record 1.6 trillion yen ($17.1
billion), larger than a median forecast for a 1.38 trillion yen
    The data comes as new Prime Minister Shinzo Abe works on
plans to combine aggressive monetary policy easing with fiscal
stimulus to shift the economy into a higher gear and end nearly
20 years of mild deflation.
    "Trade deficits could continue for much of this year, if not
into next year," said Norio Miyagawa, senior economist at Mizuho
Securities Research & Consulting.
    "This shows that on a net basis money is leaving the
country. We need to turn this around by increasing our earnings
power from exports. A weak yen will help, but it won't solve all
our problems."
    Since November the yen has tumbled 16 percent versus the
dollar as expectations have grown for aggressive fiscal and
monetary policy measures -- making exports more competitive but
increasing the cost of imports priced in dollars.
    Exports rose 6.4 percent in January from a year earlier,
more than the median estimate for a 5.6 percent annual increase.
It was the first increase in eight months.
    Exports to China, the major destination for Japanese 
shipments, rose 3.0 percent from a year earlier.
    Imports jumped 7.3 percent in January from a year earlier,
well above the median estimate for a 1.6 percent annual
increase, as Japan imported more fossil fuels to make up for the
closure of almost all of its nuclear power plants.
    Since taking office in December, Abe has compiled a stimulus
package that is the country's biggest spending push since the
global financial crisis in an effort to kickstart the economy,
which has contracted for the past three quarters.
    Next week, Abe is expected to nominate a BOJ governor and
two deputy governors, giving him the opportunity to shift the
central bank toward the aggressive easing that he favours.
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