Japan Trade Gap Narrows In December

japanflag nov14 19jan23 lt

Japan's trade deficit narrowed to a five-month low in December but the whole year shortfall was the biggest on record, official data revealed Thursday.

Exports increased 11.5 percent on a yearly basis in December, slower than the 20.0 percent rise in November, the Ministry of Finance reported. The annual growth was forecast to slow more markedly to 10.1 percent.

Similarly, growth in imports eased to 20.6 percent from 30.3 percent in the previous month. Economists had forecast a faster growth of 22.4 percent.

The trade deficit narrowed more-than-expected to a five-month low of JPY 1.45 trillion from JPY 2.03 trillion in December. The expected level was JPY 1.65 trillion.

The slowdown in exports growth reflected weaker rise in export prices as the yen rallied further last month, Capital Economics economist Darren Tay, said.

The economist estimated that export volumes advanced around 3 percent and import volumes increased about 1 percent and net trade will provide a small boost to the fourth quarter GDP growth.

Last week, the World Bank had projected Japan's GDP to grow 1.0 percent in 2023 and 0.7 percent next year.

In the whole year of 2022, the trade shortfall widened to JPY 19.97 trillion on surging energy bills and weaker yen, marking the biggest deficit since comparable records began in 1979, the data revealed.

The value of imports increased last year after the war in Ukraine lifted fuel prices. Exacerbating the situation, the yen weakened sharply against the US dollar.

The previous higher trade deficit was reported in 2014, when the shortfall was JPY 12.82 trillion.

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