"Exports are rebounding on a pick-up in the overseas economy, while imports are likely to expand further before a sales-tax increase"
- Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co.
Japan's trade deficit nearly doubled in October, as robust growth in exports to the U.S. and China was outpaced by sharp rise in energy imports in the wake of the nuclear industry's shutdown, according to the Finance Ministry's data. The country's trade deficit reached 1.09 trillion yen compared with a year ago, marking the 16th consecutive month of deficits. Exports unexpectedly increased 18.6% to 6.1 trillion yen on an annual basis, largely due to 31.3% rise in car shipments, whereas economists had expected a 16.5% advance. While improving global economy and especially a weak Yen, which has lost 14% versus the U.S. Dollar in 2013, have boosted pick up in overseas demand, it has also increased the cost in yen terms for energy imports. A 68% surge in costs for imported crude oil in October pushed the trade deficit up 96% over a year earlier.
Trade trends over the past year underscores challenges Prime Minister Shinzo Abe faces to restore growth with a combination of economic reforms, lavish spending, and monetary stimulus, which so far have yet to materialize, but are supposed to sustain growth in the long term by enhancing the nation's waning competitiveness. Japan's GDP grew at an annualized 1.9% in the third quarter after a 3.8% expansion in the previous three-month period. The economy is expected to contract in the Q2 of 2014 following the April consumption tax hike.
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