At some point, I suggest now, Japan needs to stop blaming the earthquake and tsunami for its collapse in exports. Furthermore, Japan is going to have difficulty financing its debt unless its turns the situation around quickly.
That may not be likely as Japan logs record trade deficit in January
Japan posted its biggest ever trade deficit in January, topping the previous record seen during the financial crisis in 2009, Ministry of Finance data showed On Monday, underlining concerns that a persistent trade gap may undermine the country’s ability to finance its debt.
The trade deficit stood at 1.475 trillion yen ($18.59 billion), against median market forecast for 1.468 trillion yen, marking a fourth straight month of deficit, as weak global demand and a strong yen hurt exports and robust fuel demand boosts imports.
Exports fell 9.3 percent from a year earlier, down for a fourth straight month. That compared with a 9.5 percent drop expected by economists, following an 8.0 percent decline in the year to December.
Japan logged an annual trade deficit in 2011 for the first time in 31 years as the March disaster, a global slowdown and a strong yen dealt a blow to an export-reliant economy.
Imports Up Exports Down
Imports rose 9.8 percent from a year ago and energy prices are one of the reasons. Japan needs alternate energy sources following the shutdown of its nuclear reactors.
While rising imports may still be blamed on the tsunami, the collapse in exports has a different reason. Europe is in a major slowdown and more US consumers are happy with GM and Ford autos.
This does not bode well for Japan.
Mike “Mish” Shedlock
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