Japan runs current account deficit due to rising fuel prices

TOKYO, Feb 8 (Reuters) – Japan posted a current account deficit in December for the first time in a year and a half due to soaring fuel import prices, data showed on Tuesday, a sign of the rise world commodity prices. inflation inflicts on the economy.

The data underscores the shift in Japan’s economic structure from a country that grew rich through the export of goods to one vulnerable to fluctuating commodity costs due to its growing dependence on energy and food imports.

The world’s third-largest economy recorded a current account deficit of 370.8 billion yen ($3.2 billion) in December, government data showed, beating market forecasts for a surplus of 73.5 billion yen . This is the first deficit since June 2020.

Rising fuel prices pushed the value of imports up 44.8% in December from a year earlier, outpacing an 18.7% rise in exports and pushing the trade balance to a deficit of 318.7 billion yen.

Japan’s rising energy bill could increase public complaints about a weak yen, further inflating the cost of imports.

“The disadvantages of a weak yen are that it increases the cost of energy and food imports, thereby increasing the burden on households as well as the material costs for businesses,” the senior diplomat told Reuters recently. Japanese Masato Kanda. Read more

For 2021 as a whole, Japan recorded a current account surplus of 15.4 trillion yen, down 2.8% from a year earlier, largely due to rising electricity costs. energy, according to the data.

The decline in the trade surplus was somewhat offset by a steady rise in overseas investment returns, which pushed Japan’s income surplus up from 1.2 trillion yen to 20.4 trillion yen.

“Japan used to derive a surplus from merchandise exports. This pattern has evolved into one in which Japan benefits from investment flows,” SMBC Nikko Securities wrote in a research note.

Reporting by Leika Kihara; Editing by Raju Gopalakrishnan

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