-Takeshi Minami, chief economist at Norinchukin Research Institute
The world's third largest economy posted its 20th straight monthly trade gap, while the figure came significantly better than it was a month earlier, suggesting revised exports outlook can be too pessimistic. The Ministry of Finance reported on a 800 billion yen trade gap, down from 2.79 trillion recorded in January, however, missing analysts' expectations for a 600 billion gap. On a seasonally adjusted basis the gap hit 1.13 trillion, falling from 1.82 trillion posted in the prior month. Imports surged 9% to 6.6 trillion yen over the period, while exports rocketed almost 10% to 5.8 trillion. Figures, however, surprised markets as analysts expected a 12.5% pickup in shipments, while imports was projected to rise only by 7.2%. The economy has run a trade a gap for the last 20 months, posting the record stretch.
Imports is on the rise as Japanese companies stocks were up on foreign goods before the upcoming sales tax hike. Moreover, the economy is highly dependent on imported fuel, after the Fukushima nuclear disaster left Japan bereft of its own nuclear power base. At the same time, tepid exports growth has been a key concern for the Bank of Japan, with policymakers counting on shipments in order to cushion any slide in private and business consumption after April. One of the BoJ board members expressed his concerns that both exports and consumer spending will continue to disappoint, leaving the economy without two drivers of growth.
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