Japan’s trade deficit narrowed sharply in February from the previous month’s record shortfall, as gains in imports slowed while exports remained resilient despite the global economic slowdown.
(Bloomberg) — Japan’s trade deficit narrowed sharply in February from the previous month’s record shortfall, as gains in imports slowed while exports remained resilient despite the global economic slowdown.
The trade gap shrank to 897.7 billion yen ($6.8 billion) from 3.5 trillion yen in January, the finance ministry reported Thursday. Analysts had forecast a 1.15 trillion yen deficit. Imports rose 8.3% from a year ago, while exports climbed 6.5%.
The report showed exports to the US was up 14.9%, while those to Europe gained 18.6%. Shipments to China fell 10.9%, declining for the third month although it slowed its rate of falls.
Recovering exports may raise expectations the Bank of Japan under Kazuo Ueda, who is set to take over as governor next month, may consider winding down its massive easing policy sooner rather than later.
However, it was still the 19th consecutive month of trade deficit, highlighting Japan’s long struggle to recover from the impact of Covid amid a weaker yen and higher oil prices. The economy just managed to avoid a recession last quarter.
Economists also warn of multiple downside risks ahead, including a global slowdown driven by rate hikes around the world.
What Bloomberg Economics Says…
“Looking ahead, we expect the trade deficit to hover around the same level in March, with exports hemmed in by a softer yen (a positive) and weaker external demand (a negative).”
— Yuki Masujima, economist
For the full report, click here
The outlook is further clouded by the collapse of Silicon Valley Bank and the still-tight US labor market, which recently sparked speculation that the Federal Reserve may halt raising rates soon.
(Updates with more details from the report)
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