Japan reported a larger-than-expected trade deficit in February 2022. This comes as a surge in import costs driven by rising energy adds to the vulnerability of the world's third-largest economy.
Wednesday (16/3), Japan's Ministry of Finance reported that exports only rose slightly, less than expected despite the rebound in shipments to China. This is a worrying sign for the Japanese economy as it faces uncertainty due to global supply constraints and Russia's invasion of Ukraine.
Meanwhile, imports in February 2022 jumped 34.0%. The realization was above market estimates by the median for a 28.0% gain in a Reuters poll.
The imports also outpaced the 19.1% yoy increase in exports last month, which ultimately resulted in a trade deficit of 668.3 billion yen or US$5.65 billion. Again, this trade balance deficit was larger than expected in a Reuters poll with a deficit of 112.6 billion yen.
Even so, the trade balance deficit in February is still narrower than the trade deficit recorded in January 2022, which reached 2.19 trillion yen. It was also the largest one-month trade balance deficit in eight years.
By region, exports to China, Japan's biggest trading partner, increased 25.8% in the 12 months to February. That was driven by shipments of more powerful semiconductor machines to China, after registering a Lunar New Year-related contraction in the previous month.
Exports to the United States, the world's largest economy, grew 16.0% in February, on stronger shipments of cars and semiconductor machines.
Japan's economy rebounded less than originally expected in the final quarter of 2021, the government said last week, due to weaker growth in consumer and business spending.
The downgrade in fourth-quarter growth is bad news for policymakers tasked with sustaining a fragile recovery as the Ukraine crisis clouded the outlook for the global economy.
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