Trade deficit slows Japan's recovery from earthquake and tsunami
Monday, February 20, 2012 10:34 AM
Japan posted a record trade deficit in January as the yen's strength and weaker global demand eroded manufacturers' profits and slowed the nation's recovery from last year's earthquake and tsunami, Bloomberg reported.
The trade gap widened to 1.48 trillion yen ($19 billion) and shipments dropped 9.3 percent from a year earlier as energy imports surged, the government said today. The median estimate of 28 economists surveyed by Bloomberg News was for a shortfall of 1.46 trillion yen.
The drag from the trade deficit risks offsetting a potential boost to the economy from reconstruction work. JPMorgan Securities predicted that recovery efforts will drive a return to growth this quarter after the economy shrank in the final three months of last year.
The government is seeing progress in its campaign to rein in the yen, with the currency trading at its lowest level in seven months against the dollar after the Bank of Japan last week announced extra monetary stimulus.
"The recovery pace may be slow," said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. "That's because a recovery in exports may be dull and reconstruction demand may not come out as strongly as some people expect."