- Marcel Thieliant, Japan economist at Capital Economics
Japan's trade deficit expanded in May, while imports plunged, and exports grew at the slowest pace in nine months. Exports rose 2.4% from the previous year to 5.741 trillion yen in May, as overseas shipments to the US and China moderated, in a sign that a tepid beginning to the year of the world's number one economy and weakening growth in China may hinder Japan's economic recovery. Export volumes, considered to be a more trustworthy measure of Japan's export strength than the overall value, dropped 3.8%, the first decline in three months, according to the Finance Ministry said. At the same time, imports plunged 8.7% to 5.956 trillion yen in the reported month, recording the fifth straight month of decrease. The median economists' forecast stood at a 7.5% decline. The drop was mainly attributed to mineral fuels, which plummeted 33%, largely due to the decline in global fuel prices since last June. As a result, Japan logged a trade deficit of 216.0 billion yen in May, compared with 53.4 billion in April.
The data comes a day before the Bank of Japan's two-day monetary policy gathering. The central bank is widely predicted to stand pat on monetary policy following BOJ Governor Haruhiko Kuroda's recent comments that the nation's currency was already very weak and was unlikely to depreciate further.
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