Japan's trade deficit narrows on slower imports
TOKYO (AP) — Japan's trade deficit narrowed in April as exports grew faster than imports following an increase in the sales tax that is expected to dampen demand for some time.
Energy plays a big role in Japan's trade balance, and a moderation in April in costs for imports of oil and gas that account for about a third of Japan's imports reflected a strengthening of the yen and decreases in shipments of some fuels.
The 808.9 billion yen ($8 billion) deficit in April, according to preliminary figures released Wednesday by the Ministry of Finance, compared with a gap of 877.4 billion yen a year earlier and with a 1.7 trillion yen deficit in March.
Exports climbed 5.1 percent from April 2013 to 6.07 trillion yen ($60 billion), led by shipments of machinery and transport equipment, as recoveries gained momentum in overseas markets.
Imports rose 3.4 percent to 6.88 trillion yen ($68 billion). Consumer demand likely contracted in April after shoppers and businesses rushed purchases to beat the April 1 tax hike, which raised the sales tax to 8 percent from 5 percent. But the deficit could widen again once sales pick up in coming months.
The U.S. was Japan's biggest export market in April, followed by China. But while Japan ran a 547.5 billion yen ($5.4 billion) trade surplus with the U.S., down 2.8 percent from a year earlier, its deficit with China rose 3.5 percent to 461.1 billion yen ($4.5 billion).
Exports to China, mostly of machinery, chemicals and vehicles, rose nearly 10 percent, while imports, mostly of manufactured items, climbed about 8 percent.
Japan's exports are recovering as the economy emerges from a protracted slump, but Japanese manufacturers have shifted a large share of their production capacity offshore to cut costs, avoid trade barriers and be closer to fast growing emerging markets.
Imports of oil and gas surged as thermal plants increased operations to offset lost generating capacity after nuclear reactors were shut down for safety checks following the March 2011 accident at the Fukushima Dai-Ichi nuclear power plant. That further eroded the trade balance, which could improve if some plants are allowed to go back online once they meet tightened requirements.