Japan falls back into deficit

Tokyo - China slowdown has taken much of the steam out of the nation's recovery

 Japan's trade balance returned to deficit in January, with a shortfall of ¥646 billion ($5.65 billion) as exports fell 13 per cent from the year before, led by an 18 per cent plunge in the value of shipments to China.
Customs data released on Thursday show exports dropped to ¥5.35 trillion ($46 billion) while imports plunged 18 per cent to ¥6 trillion ($52 billion). The deficit compared with a surplus of ¥140.2 billion in December. China's economic slowdown has taken much of the steam out of the recovery, of the world's third-largest economy. A report by the Japan External Trade Organisation, released on Wednesday, showed Japan's total trade with China fell 12 per cent last year from the year before.
Exports of machinery to China fell 27 per cent in 2015 from the year before, reflecting a slowdown in manufacturing investment, while exports of chemicals, iron and steel and vehicles also dropped, the report said. Overall, Japan's exports to Asia also fell, by 18 per cent. Japan's exports to the US slipped 5.3 per cent from the year before to ¥1.13 trillion ($9.8 billion) in January while imports fell 9.7 per cent to ¥584.8 billion ($5.1 billion).
Exports of transport equipment rose 26 per cent, with cars, trucks and ships showing strong growth. Machinery and chemicals exports also grew at a double-digit pace.
Japan has mostly run trade deficits since it closed nuclear reactors following the 2011 accident at the Fukushima Dai-Ichi plant and stepped up imports of oil and gas. The plunge in oil prices has helped reduce energy-related imports, which fell 45 per cent from a year earlier in January.
Adjusted for seasonal factors, Japan posted a surplus of ¥119 billion ($1 billion). But imports fell five per cent in volume terms while exports fell nine per cent, said Marcel Thieliant of Capital Economics.
He said the trade balance would likely improve in coming months as the most recent dips in oil prices are gradually reflected in trade data. "However, we expect crude oil prices to creep higher over the course of the year, so any further increase in the trade surplus should prove short-lived," Thieliant said.