Japan has posted its 20th straight monthly trade deficit in February, but analysts welcomed the fact that the figure had narrowed from a record shortfall in January as export growth outpaced imports.
The latest data indicate the impact of a weak yen and post-Fukushima energy imports is starting to ease, soothing concerns about Japan’s economic recovery.
The finance ministry said on Wednesday Japan logged a Y800.3 billion ($A8.68 billion) trade deficit in February, up 3.5 per cent year on year. That came as exports rose 9.8 per cent to Y5.8 trillion, while imports grew 9.0 per cent to Y6.6 trillion.
But while it marked the 20th successive month in the red – the longest spell in more than three decades – it was a sharp fall from January’s Y2.79 trillion shortfall.
The country also posted a record deficit for 2013 as the weakening yen, while good for exporters, sent energy bills soaring.
“The effects of the weaker yen appear to be wearing off, as can be seen in how import costs have stabilised,” said Hideki Matsumura, senior economist at the Japan Research Institute.
“And growth in import volume also appears to be settling down. When considering all this, it’s likely that we may have reached the peak in trade deficits, and we could see the red shrink gradually.”
The data will come as good news for Prime Minister Shinzo Abe’s bid to kick-start growth as Japan prepares for a sales tax hike next month that critics warn could dent a nascent recovery as prices rise and consumer spending drops.
“The sharp fall in the trade deficit in February is welcome, and the shortfall may narrow slightly further in coming months,” London-based Capital Economics said.
However, it added that, seasonally, the trade deficit tends to drop off in February “so this smaller shortfall is not necessarily something to get excited about.
“The trade deficit may spike briefly in March due to last-minute spending ahead of April’s increase in the consumption tax, before narrowing sharply once the tax has been raised,” it added.