Japan posts worst November trade deficit on record

Japan posted its worst November trade deficit on record today, with a weaker yen driving up the cost of imported oil and gas.

The energy-starved country has to rely on expensive imported energy as most of its nuclear power plants are shut following the 2011 Fukushima crisis.

Energy imports meanwhile, have become more expensive following a sharp decline in the value of the yen which had also led to more exports of Japanese goods, which became cheaper overseas.

Imports for the month were up 21 per cent, even as exports rose 18 per cent, resulting in a November trade deficit of $12.9 billion.

Representing a 35-per cent increase from last year, this is the worst November on record and also represents a record 17th straight month of trade deficits.

The country's nuclear industry suffered a crippling blow from the 2011 earthquake and tsunami which caused a meltdown at the Fukushima Daiichi power plant and forced nearly all of the country's nuclear plants offline for safety checks.

According to some analysts Japan's trade deficit may be expected to shrink next year following a sales tax increase that had led to last-minute purchases that appeared to be boosting imports.

Meanwhile, Japan's exports were up for a ninth straight month led by car shipments to the US and China, a sign of the weak yen coupled with a recovery in global demand, energising a major growth driver in the world's third-biggest economy.

The volume of cars shipped to China and the US increased by 18.5 per cent and 13.2 per cent respectively, with a sharp rise in China sales occurring a year following a boycott of Japanese products in China in a row over disputed islands in the East China Sea.

Demand for Japanese cars in the US increased, with a steady recovery in the US economy, while the weak yen gave a competitive edge to exporters such as Toyota Motor Corp, according to analysts.

Reuters quoted Taro Saito, senior economist at NLI Research Instituted as saying, the weak yen was having its effects on Japanese exports albeit slowly, giving carmakers some room to cut prices. He added, as for China, one could not expect demand there to accelerate from now on as the Chinese economy was heading for a stable slowdown.