Japan’s trade deficit reached a record high in January as rising import costs overshadowed the country’s growth in exports. This has heightened concerns that a weak yen alone will not aid recovery as companies move their production overseas to benefit from lower labor costs.

The Japanese Ministry of Finance released numbers showing that outbound shipments increased 9.5% in January; however, the trade balance came to a 2.79 trillion yen deficit (USD$27.30 billion) as imports rose 25%.

This information comes soon after a survey showing a poorer outlook by Japanese manufacturers as businesses prepare for a sales tax hike taking effect in April.

“Global economic growth remains slow, but should pick up later in the year as sentiment improves.” said Marcel Thieliant of Capital Economics. “But the monthly numbers may well look worse before they get better”.

Meanwhile, the Bank of Japan’s (BOJ) Governor Haruhiko Kuroda says he’s prepared to do whatever it takes to support the nation’s recovery and end its long period of deflation.

Twenty-five of 34 economists predict that the Bank of Japan will add further stimulus by the end of the third quarter of this year, with 13 of them predicting action by the end of the second quarter, according to a Bloomberg survey held in February.

The Nikkei was down 2.15% following the the Ministry of Finance report.

About Nut Muengrit

Nut Muengrit has been doing business throughout Southeast Asia for many years and is on the board of directors of companies in Thailand, Vietnam, Hong Kong and Cambodia. He is knowledgeable in offshore incorporation and low-tax structures.
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