Japan logged its biggest ever current account deficit in January as exports stuttered and rising fuel costs continued to bite, but revised GDP data revealed the picture was not as bad as feared.
The deficit in the current account, the broadest measure of trade with the rest of the world, stood at 437.3 billion yen ($5.4 billion), the finance ministry said.
It was the first negative figure since January 2009, the ministry said, when Japan registered its previous record shortfall of 132.7 billion yen at the height of the global financial crisis.
The deficit grew as the nation’s exports sagged on a high yen and slow overseas demand, but analysts stressed that the January data was mainly dragged down by lunar new year holidays in key Asian markets.
They said they expected Japan’s current account to return to surplus in February as Asia-bound exports pick up.
“This is mostly due to one-off factors and therefore will not be a trend,” said Norio Miyagawa, a senior economist at Mizuho Research and Consulting.
“We have an income surplus (such as earnings on foreign investments) of more than one trillion yen in the figures, so the result is not worrisome,” he told Dow Jones Newswires.
Still, the data stood in sharp contrast to a 547.2 billion yen surplus seen a year earlier, and was worse than the 322.4 billion-yen deficit expected by economists, who have warned that Japan’s trade deficit could continue.
At a time when exports are struggling, Japan has had to steadily increase energy imports as utilities turn on thermal power plants while atomic reactors stay offline amid public opposition following the Fukushima nuclear disaster.
Meanwhile, the Cabinet Office said Japan’s economy shrank 0.2 percent in the October-December quarter from the previous three months, revising the figure from an earlier announced 0.6 percent contraction.
Private investment was sharply higher than initially thought, helping to drive up the overall figure.
Capital spending rose 4.8 percent, compared with an original showing of a 1.9-percent increase.
Private consumption, which accounts for about 60 percent of GDP, was upgraded to 0.4 percent growth compared with the initial figure of a 0.3 percent gain.
But a high yen and disruption to global supply chains caused by severe flooding in Thailand last year weighed on the Japanese economy.
“It is still the first contraction in two quarters. But overall the economy is in a moderate recovery trend,” Hiroshi Ogushi, parliamentary secretary at the Cabinet office, told a press conference.
“There is no change to our view that the upward trend is continuing,” he said, according to the Nikkei business daily.