27 Jan 2014

Record annual trade deficit for Japan

9:33 pm on 27 January 2014

Japan has posted its worst trade figures on record, with a deficit of 11.5 trillion yen ($US112 billion) last year.

According to the Finance Ministry, it is the biggest deficit since 1979, when comparable data began to be collected.

In 2011 came the Fukushima disaster in the aftermath of a massive tsunami and earthquake. All of Japan's nuclear reactors were shut down and the country was forced to import more and more fossil fuels to generate electricity.

Last year, the government of Shinzo Abe deliberately pushed down the value of the Japanese yen by 25 percent. This was supposed to help boost exports, but so far all its really done is increase the cost of those energy imports, the BBC reports.

The latest trade data showed that while Japan's imports of Liquefied Natural Gas (LNG) rose 0.2% by volume in 2013 from the previous year - the value of those imports surged nearly 18%.

It is the third year in a row that Japan - traditionally known for the strength of its exports - has reported an annual trade deficit.

In an attempt to change that, policymakers have unveiled a series of aggressive moves over the past few months, including doubling the country's money supply. The steps have had a big impact on Japan's currency - which has fallen sharply against the US dollar.

A weak currency bodes well for Japan's exports - a key driver of its growth - making them cheaper for foreign buyers. A weak yen also boosts profits of exporters when they repatriate their overseas earnings back home.