JAPAN: Japan logs largest ever trade deficit for the month of May as the impact of the March 11 earthquake continues to be felt
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465678
JAPAN: Japan logs largest ever trade deficit for the month of May as the impact of the March 11 earthquake continues to be felt
- Title: JAPAN: Japan logs largest ever trade deficit for the month of May as the impact of the March 11 earthquake continues to be felt
- Date: 21st June 2011
- Summary: YOKOHAMA, JAPAN (FILE - APRIL 27, 2011) (REUTERS) CONTAINER PORT CONTAINER TRUCK DRIVING INTO PORT MORE OF CONTAINER PORT TRUCKS LOADING CONTAINERS ONTO SHIP CONTAINER TRUCK DRIVING CONTAINERS CRANE LOADING CONTAINER ON SHIP CRANE LOADING CONTAINER ON TRUCK CONTAINER PORT
- Embargoed: 6th July 2011 13:00
- Keywords:
- Location: Japan, Japan
- Country: Japan
- Topics: Economy
- Reuters ID: LVA85L3KB1BO3E5A1XRPKSW2I4RQ
- Story Text: Japan announced a record trade deficit for the month of May, it's largest ever, on Monday (June 20) as companies continue to mend supply chains and seek to recover factory output after the March earthquake and tsunami.
According to Ministry of Finance data released on Monday, exports fell 10.3 percent in May from a year earlier, compared with a median forecast for an 8.4 percent annual decline, and followed a 12.4 percent drop in April. Imports rose 12.3 percent in the year to May, more than the median estimate for an 11.6 percent annual rise.
Japan's Chief Cabinet Secretary Yukio Edano said the setback will be temporary.
"We had such extensive damage from the earthquake, so we did expect this to happen temporarily. We will try to get out of this situation as soon as possible." Edano said in a regular news conference.
"Because of efforts made by each individual companies, the manufacturing process is making a faster than expected recovery. So I expect things to improve in the not-so-distant future," Edano added.
The nation's trade balance registered a deficit of 853.7 billion yen ($10.66 billion), the second trade deficit in as many months as imports rise after the natural disaster. The median forecast was for a deficit of 711.1 billion yen.
Economists project Japan will remain in a trade deficit in coming months as imports of fuel are set to grow to make up for nuclear power losses and for reconstruction of the quake-hit northeast even as exports recover. Shipments to China fell an annual 8.1 percent while those to the United States fell 14.6 percent.
But the bigger-than-expected decline in exports could cast some doubt on expectations that the economy will recover in the second half of the year and lend more weight to the argument that the Bank of Japan will have to ease monetary policy further to spur the economy.
The Nikkei stock average on Monday rose after hitting a three-month low last week as France and Germany hinted at a deal to rescue Greece, helping global markets recover some of their recent losses, but investors are expected to remain cautious. The record trade deficit seemed to have little effect on stock prices.
The benchmark Nikkei average climbed 0.5 percent to 9,399.24 on Monday, while the broader Topix gained 0.6 percent to 810.10.
Thomson Reuters StarMine shows Japan trades at the biggest discount among developed markets, with valuations at just 8 times forward earnings, compared with 10.5 times for Asia and as much as 12.7 times for the U.S. market.
That means Japan trades roughly on a par with Argentina and Romania, Starmine showed.
Japan is facing its worst crisis since World War Two after the March 11 earthquake and tsunami slammed its northeast coast and triggered radiation leaks at a nuclear power plant. - Copyright Holder: FILE REUTERS (CAN SELL)
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