Japan posts record trade deficit of $112 billion in 2013

TOKYO -- Japan's trade deficit surged 65 per cent in 2013 to a record 11.47 trillion yen ($112 billion), as rising costs for imports outstripped growth in exports, especially for oil.

Provisional data show exports rose 9.5 per cent to 69.8 trillion yen ($680.9 billion), while imports jumped 15 per cent to 81.3 trillion yen ($793.2 billion).

Japan's trade deficit in 2012 was 6.94 trillion yen. The deficit has been rising as costs for imports have surged with the weakening of the Japanese yen and increased purchases of foreign oil and gas to make up for the loss of nuclear power following the disaster in Fukushima due to the March 2011 earthquake and tsunami.

The largest shortfall, 13.2 trillion yen ($128.8 billion), was with the Middle East, source of the largest share of resource-scarce Japan's imports of oil and gas.

The weaker yen is a mixed blessing for Japan. It is boosting corporate profits due to increasing yen-denominated income for companies that earn a large share of their revenues overseas.

But apart from energy imports, Japanese manufacturers increasingly are relying on overseas sources for components for electronics and other products -- further pushing import demand higher. The recovery in exports so far has failed to offset those costs, as meanwhile Japanese consumers are paying sharply higher prices for fuel and food.

Japan's deficit with China, its biggest trading partner, rose more than 43 per cent in 2013 to 5.02 trillion yen ($49 billion). With the U.S., it logged a surplus of 6.1 trillion yen ($59.5 billion), up nearly 20 per cent from a year earlier.

December's deficit was 1.3 trillion yen ($12.7 billion), the fourth straight month of increase.

The worse-than-expected trade data coincided with a flurry of selling on Tokyo Stock Exchange, where the benchmark Nikkei 225 tumbled 2.8 per cent, dropping below 15,000 for the first time in two months following last week's selloffs in Europe and the U.S. By mid-morning it was down 2.5 per cent at 15,006.68.

Japanese share prices tend to rise when the yen weakens since a cheaper yen can help exporters. But the yen, which had been trading above 104 to the U.S. dollar, had strengthened to about 102 to the dollar early Monday, driven higher by worries over emerging market currencies.