Japan reveals record trade deficit

Disaster-battered Japan reported its biggest annual trade deficit ever today, a contrast from decades of surpluses, as a nuclear crisis boosted expensive oil and gas imports.

The Finance Ministry’s preliminary trade data showed a 4.41 trillion yen (€41bn) trade deficit for the fiscal year that ended March 31.

All but one of Japan’s 54 nuclear power reactors are offline in the aftermath of a nuclear crisis set off in March 2011 by the tsunami in north eastern Japan.

That has forced Japan to rely on oil and gas-fired generation to supply electricity.

Although the central government, eager to restart some of the reactors, has been carrying out safety tests on the nuclear plants, local officials have been wary of giving a go-ahead.

The earthquake and tsunami also hurt manufacturing, not only in northeastern Japan but for those companies that had counted on supplies from that area.

Exports for the fiscal year dropped 3.7% from the previous year, while imports climbed 11.6%, according to the Finance Ministry.

The tsunami destroyed back-up generators at Fukushima Dai-ichi nuclear plant, sending three reactors into meltdown, setting off the worst nuclear disaster since Chernobyl, spewing radiation into the air and sea and contaminating farmland, forests and homes.

The trade deficit is striking given Japan’s past politically sensitive reputation as a giant exporter.

Like China nowadays, it was often the target of international criticism for running huge trade surpluses.

The ministry said comparable trade data go back to fiscal 1979, but the latest deficit number was also bigger than those dating back to the Meiji period, starting in 1868.

Japanese companies have also been gradually moving production overseas to curb damage from the strong yen, which erodes the value of export earnings.

Analysts say that if expensive fuel imports continue, Japanese consumers will likely foot higher utility bills, and that could dampen consumer spending, further hurting the economy.