TOKYO, Feb. 20 -- (Kyodo) _ (EDS: UPDATING)
Japan posted a record monthly goods trade deficit of 2.79 trillion yen in January, the government said Thursday, as the weaker yen and the suspension of nuclear power plants boosted energy import costs despite an expansion in exports.
The figure was much larger than the previous record of 1.63 trillion yen registered in January 2013, the Finance Ministry said. It was the first time the trade deficit topped 2 trillion yen on a monthly basis since comparable data became available in January 1979.
January's trade deficit, up 70.8 percent from a year earlier, marked a record 19th straight month of red ink, the ministry said in a preliminary report, signaling that the nation's power to earn foreign currencies through exports has been flagging.
The value of imports jumped 25.0 percent to a record 8.04 trillion yen, up for the 15th straight month, with those of crude oil soaring 28.1 percent and liquefied natural gas 21.4 percent.
Exports increased for the 11th month in a row, up 9.5 percent to 5.25 trillion yen, on the back of the yen's depreciation, but still failed to outweigh imports.
The yen dropped against the U.S. dollar by 20.2 percent from a year before on an average basis in January, due in part to the Bank of Japan's pledge to maintain its aggressive monetary easing policy to achieve its inflation target of 2 percent, the ministry said.
A falling yen usually supports exports by making Japanese products cheaper abroad and shores up the value of overseas revenues in yen terms, though it drives up import prices. Japan depends on imports for more than 90 percent of its energy needs.
Japan's trade balance is likely to remain in the red for the time being, as demand for natural resources has been growing from utilities bolstering fossil fuel-based power generation as an alternative to stalled nuclear power following the emergency at the Fukushima power plant in March 2011.
If trade deficits expand, the possibility cannot be ruled out that the world's third-biggest economy will become a country with a constant current account deficit in the near future, eroding the credibility of Japanese government bonds, some analysts said.
So far, around 95 percent of the bonds have been financed smoothly at home, as the BOJ has pledged to buy massive government bonds in an attempt to keep long-term interest rates low to stimulate the economy.
But if Japan's current account balance deteriorates and investors start to expect the government would be compelled to sell its bonds to foreigners, they could sell them out of concern over the outlook for the sovereign bond market, the analysts said.
"If Japan suffers from prolonged current account deficits with a lack of fiscal discipline, long-term interest rates may rise," Yoshiki Shinke, chief economist at the Dai-ichi Life Research Institute, said.
Long-term interest rates move inversely to bond prices. Higher rates would create a vicious cycle where expansion in the government's interest payments on its bonds would hamper Japan's efforts to restore its fiscal health, prodding more investors to accelerate bond selling and raising the interest rates.
It is "urgent" that Japan will improve its public finances, the worst among industrialized nations, Shinke added.
Japan's public debt is equivalent to more than 200 percent of gross domestic product. The central government debt topped 1,000 trillion yen for the first time ever last year.
In January, shipments to China, Japan's biggest trade partner, were up 13.1 percent to 862.6 billion yen, while imports jumped 34.4 percent to a record 1.91 trillion yen. Japan's trade deficit with China was 1.04 trillion yen, the largest ever.
The deficit widened against a backdrop of business shutdowns in China for the Lunar New Year holidays from late January, which normally slows Japanese exports, a ministry official said.
Exports to Asian countries, excluding China, gained 5.8 percent to 2.70 trillion yen, and imports soared 27.2 percent to 3.67 trillion yen, bringing the trade deficit to a record 966.4 billion yen.
Japan's shipments to the United States, whose economy has shown signs of recovering, rose 21.9 percent to 1.02 trillion yen, and imports climbed 25.9 percent to 656.4 billion yen.
Exports to the European Union rose 20.2 percent to 611.1 billion yen, and imports increased 20.2 percent to 699.7 billion yen.
The figures were measured on a customs-cleared basis.