Japan trade deficit hits record high in 2013

Japan's trade deficit swelled to a record $112 billion in 2013, official data showed Monday, as the benefits of a cheap yen for exports were diluted by soaring post-Fukushima energy bills. The shortfall of 11.47 trillion yen marked the biggest deficit since comparable data started in 1979, according to the finance ministry, with the December deficit alone doubling from a year earlier. Japanese energy imports surged after the 2011 Fukushima crisis forced the shutdown of nuclear reactors that once supplied a third of the nation's power. A sharp decline in the yen, which is good for exporters' profitability, also forced up the cost of importing pricey fossil-fuels to plug the country's energy gap. The yen has been under pressure since Prime Minister Shinzo Abe, who took office in late 2012, launched a policy blitz that meshed government spending with a huge programme of central bank monetary easing. The growth plan, dubbed Abenomics, is aimed at kickstarting the world's third-largest economy, which has been plagued by deflation for years. The weak yen has boosted the bottom line at exporters such as Sony and Toyota, as the cheaper unit makes them more competitive overseas while also inflating repatriated profits. Exports rose 9.5 percent last year to 69.79 trillion yen, their first increase in three years, backed by robust shipments of cars and electronics. Shipments to China rose 9.7 percent as demand recovered following a consumer boycott on Japanese brands that was linked to a Tokyo-Beijing diplomatic row, which soured already testy relations between the Asian giants. Exports to the key US and European markets also improved. Japan has seen a mixed bag of data recently, but the government's efforts to boost the economy appear to be taking hold. Growth in the first half of the year outstripped other G7 nations, although that pace slowed in the third quarter, while November inflation data suggested the Bank of Japan was getting closer to its goal of reaching sustained inflation of 2.0 percent within two years. Last week, Japan's top central banker Haruhiko Kuroda said the BoJ's monetary easing blitz was winning the war on deflation as policymakers held off announcing any fresh measures to stimulate the economy. The decision after a two-day policy meeting was widely expected, with analysts predicting the BoJ would launch an expansion of its asset-buying plan later this year to counter the effects of an April sales tax hike. The tax rise, seen as crucial to bringing down Japan's eye-watering national debt, has stoked fears of a damaging slowdown in consumer demand.