Japan incurred a deficit of 853.7 billion yen ($10.67 billion) in its trade with the rest of the world in May as exports remained in the doldrums, according to preliminary figures released by the Finance Ministry on Monday.
It was the second consecutive monthly trade deficit. The trade deficit in May sharply widened from $5.81 billion in April to the second largest on record after the $12.10 billion deficit registered in January 2009 amid the global financial crisis.
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Japan, world’s third-largest economy after the U.S. and China, relies heavily on exports for growth. But Japan still imports more than it exports as it struggles to recover from the devastating earthquake and tsunami that hit the northeastern part of the country on March 11.
The March 11 twin natural disasters directly affected many auto, electronics and other parts makers’ plants, causing disruptions to supply chains. They also resulted in the shutdown of many nuclear power plants, including the Fukushima No.1 plant at the center of the ongoing nuclear crisis.
As a result, many factories in a wide range of industries, even in the unaffected areas, have been forced to stop or curtail operations due to parts and electricity shortages, while electric power companies have been forced to sharply increase imports of oil and gas as alternative fuels to atomic power generation.
Japan’s overall exports fell for the third straight month in May on a year-over-year basis, plunging 10.3 percent to $59.51 billion, although the pace of decline slowed from 12.4 percent in April.
Japan’s overall imports rose for the 17th successive month in May on a year-over-year basis, jumping 12.3 percent to $70.18 billion.
The drop in Japan’s overall exports in May was led by autos, electronic parts, including semiconductors, and auto parts, which fell 38.9 percent, 18.5 percent and 18.5 percent, respectively, in terms of value.
The rise in Japan’s overall imports in May was fueled by crude oil, liquefied natural gas and nonferrous metals, which increased 30.7 percent, 33.0 percent and 30.4 percent, respectively, in terms of value.
Japan’s exports to the U.S. fell for three months in a row in May on a year-over-year basis, tumbling 14.6 percent to $8.07 billion, although the pace of decline significantly slowed from 23.3 percent in April.
Japan’s imports from the U.S. rose for the second straight month in May on a year-over-year basis, increasing 4.2 percent to $6.77 billion. The pace of increase quickened from 1.9 percent in April.
As a result, Japan’s trade surplus with the U.S. narrowed for two months in succession in May on a year-over-year basis, shrinking 56.0 percent to $1.30 billion.
Japan’s shipments to the U.S. fell much faster than those to the 27-nation European Union and the rest of Asia, including China, which declined 8.8 percent and 8.7 percent, respectively.
Commenting on the May trade figures, Chief Cabinet Secretary Yukio Edano said that the second consecutive monthly trade deficit had been expected as the March 11 disasters caused serious damage.
The top government spokesman said, however, that he believes Japanese exports will recover “in the not-so-distant future” as “restoration in the manufacturing process is progressing faster than initially expected, thanks to corporate efforts.”
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