In March alone, trade deficit quadrupled to 1.45 billion yen. Imports jumped 18.1%, accelerating from a 9% increase in February. Meanwhile, exports only rose 1.8% in March, easing from the growth rate of 9.8% in February.
Marcel Thieliant, Japan economist for Capital Economics, said a rebound in the annual growth rate of import values may be an important reason for the larger shortfall, as consumers were in a last-minute spending rush ahead of this month’s sales tax hike.
However, he said the plunge in export growth has also caused concerns that the weakening currency alone may not boost the competitiveness of Japanese firms, as some exporters may still be struggling despite a weaker yen.
Looking ahead, he expected that the trade balance would still be in the red as the yen continues to weaken over the coming year. Nevertheless, the trade shortfall is likely to narrow in the second quarter, as consumers may rein in spending after the consumption tax increase and the partial resumption of nuclear energy generation should lower energy imports to some extent, he added.