Published: Wed, June 21, 2017
World | By Paul Elliott

Japan Has Surprise Deficit as Import Growth Beats Exports

Japan Has Surprise Deficit as Import Growth Beats Exports

Japan relies heavily on energy imports, with most of its nuclear power plants offline since the March 2011 Fukushima nuclear crisis.

Imports increased 17.8 percent (estimate +14.5 percent).

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

Part of that was a rebound from weak shipments previous year caused by the Kumamoto natural disaster in April 2016.

The country tends to post a trade deficit in the month of May due to the Golden Week holidays that weigh on exports from Japan.

That missed forecasts for a surplus of 43.3 billion yen following the 481.1 billion yen surplus in April. In April, the trade surplus with the United States dropped 4.2% on annual basis.

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

Larger shipments of flat panels and semiconductor manufacturing equipment drove the gains in China-bound exports.

Exports to the USA climbed 11.6% to 1.082 trillion yen, while exports to the European Union spiked 19.8% to 692.368 billion yen.

Latest government data showed exports from Japan rose 14.9% on year compared to the 16.1% rise projected by a Reuters poll.

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.

The trade deficit with China shrank 22.4 percent to 311.8 billion yen as exports grew 23.9 percent.

Policymakers and economists have become more optimistic about Japan's prospects this year as an increase in factory output and a tightening labor market show the economy is poised to extend its recent growth.

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