Trade Deficit of Japan Hit Record in January 2013 as Yen Weakened

Feb 20, 2013 15:57 IST

The monthly trade deficit of Japan hit record in January 2013 after the aggressive monetary policy weakened Yen, its currency considerably.

The exports increased in January, which was the first increase in 8 months time. Exports of Japan increased because the goods became affordable for the foreign buyers. However, because of the weakened Yen, the import bill also increased which eventually led to a monthly trade deficit of 1.6tn yen or 17.1 billion US dollars. This was the 10 percent increase from 2012.

The deficit of Japan was also affected because of an increase in the fuel imports. Japan is the third largest economy of the world and there was an increase in the fuel imports because most of the nuclear reactors of the country remained shut down.

The imports of the country increased 7.3 percent in January 2013 from January 2012. The highest jump was in import of liquefied petroleum gas (LPG) which increased over 28 percent. In the meanwhile, exports also increased 6.4 percent. The exports were driven considerably by shipment of the manufactured goods.

Factors affecting Japan’s export

• The exports of Japan are crucial factors that drive its economic growth. Exports of Japan were affected because of various factors. These factors are as follows:
• Demand from the biggest markets of Japan, Eurozone, was hurt because of ongoing debt crisis of the region.
• Territorial dispute with the biggest trading partner of Japan, i.e., China hit the sales of goods produced by Japan over the duration of past certain months.
• The exports also declined to the European Union during January 2013.

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Read more Current Affairs on: Trade Deficit , Yen

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