Japan seen posting record trade deficit in January as import bill soars

Thu Feb 13, 2014 10:38pm EST
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By Stanley White

TOKYO (Reuters) - Japan is expected to post a record trade deficit in January as a weak yen pushes up the cost of imports and as export demand slows in a cautionary note about the economic outlook, a Reuters poll showed.

The trade deficit, which is forecast to swell to 2.5 trillion yen ($24.5 billion), would provide further evidence that a weak yen alone cannot boost exports as many Japanese manufacturers have shifted factories overseas.

A record trade deficit would also suggest that overseas demand may not be strong enough to offset the negative impact of a scheduled sales tax increase in April, meaning policy makers may have to consider other ways to stimulate the economy.

"The trade deficit may not expand further, but Japan's terms of trade are likely to continue to deteriorate, so you can't say things will start to get better," economists at Mitsubishi UFJ Morgan Stanley Securities said.

Japan's exports are forecast to have risen a median 12.6 percent in January from a year earlier, according to the poll of 25 economists.

That would be a slowdown from a 15.3 percent increase in the year to December, showing that shipments from the world's third-biggest economy started the year on a soft note.

Imports were seen up an annual 21.8 percent in January, the poll showed, versus a 24.7 percent annual increase in December.

Recent gains in imports are due partly to strong domestic demand, which is a positive sign for the economy.   Continued...

A worker walks in a container area at a port in Tokyo January 27, 2014. REUTERS/Toru Hanai