Japan Posts Surprise Trade Deficit

TOKYO — Japan, a nation that rode exports to become the world’s second largest economy, posted a surprise trade deficit in August, an alarm signal for the country’s already shrinking economy and yet another worrisome indicator for troubled global markets.

…The government attributed the trade deficit to a short-term imbalance: Falling car exports and higher energy costs. Four of Japan’s five largest carmakers said this week that global demand was falling, especially in the United States. At the same time, the cost of imported oil and coal soared to record highs.


“I expect it will only be a temporary phenomenon and believe that the Japanese economy has not been seriously ill,” Kaoru Yosano, the economy minister, told the Kyodo news agency.

Others are not so confident. The Japanese economy shrank in the second quarter at the fastest rate in 7 years. Fuel and food prices have pushed inflation to the highest rate in a decade. Exports, the primary engine of growth in the economy, contributed nothing to growth in the second quarter of the year — and have apparently fallen since then.

If it persists, a Japanese trade deficit would also hurt the U.S. economy and could damage the dollar, said Shumpei Takemori, a professor of economics at Tokyo’s Keio University.

Washington Post