Japan Posts Bigger Trade Deficit As Energy Imports Rise

Japan reported a wider-than-expected trade deficit in February as an energy-driven surge in import costs caused by massive supply constraints added to vulnerabilities for the world's third-largest economy, Daniel Leussink reported for Reuters.

Photo Insert: The Port of Tokyo

Exports rose slightly less than expected despite a rebound in China-bound shipments, in a worrying sign for an economy facing growing uncertainty from supply challenges and Russia's invasion of Ukraine.

"There's a big likelihood the trade deficit will expand further," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"Although car exports picked up in February, they aren't in a situation of growing steadily due to supply disruptions and a chip shortage, while imports are swelling as oil and raw material prices soar."

Imports surged 34.0% in the year to February, Ministry of Finance data showed on Wednesday, above a median market forecast for a 28.0% gain in a Reuters poll.

That outstripped a 19.1% year-on-year rise in exports in February, resulting in a 668.3 billion yen ($5.65 billion) trade deficit, which was bigger than the 112.6 billion yen shortfall expected in a Reuters poll.

February's deficit was, however, narrower than January's 2.19 trillion yen gap, which was the biggest in a single month in eight years. The finance ministry said exports declined a seasonally adjusted 0.5% from the previous month, underscoring headwinds in outbound shipments. Imports rose a seasonally adjusted 2.7% month-on-month.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic