Japan’s trade deficit persists as recession risks loom

TOKYO – Japan’s export growth slowed sharply in December as Chinese demand remained under pressure, while imports jumped, keeping the trade balance in the red for the 17th straight month.

Exports rose 11.5 percent year-on-year in December, the slowest growth since the start of last year, weighed by China-bound cars, auto parts and chip-making machinery, Ministry of Finance data (MOF) showed on Thursday.

Imports grew 20.6 percent, led by oil, coal and liquefied natural gas, reflecting cost-push inflation that boosts costs of living and doing business, potentially depriving purchasing power.

The rises in shipments and imports compared with 10.1 percent and 22.4 percent year-on-year gains expected, respectively, by economists in a Reuters poll.

December’s trade deficit, at 1.45 trillion yen ($11.29 billion), compared with economists’ median estimates for 1.65 trillion yen.

Thursday’s trade data highlights the challenge of a resource-deficient country that relies heavily on imports of commodity and energy. The weak data also dashes policymakers’ hopes for an export-led economic recovery from the pandemic.

For the whole of 2022, Japan logged a trade deficit of 19.97 trillion yen, the second straight annual shortfall and the biggest since 1979.

($1 = 128.4300 yen)