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Japan logs record merchandise trade deficit in January as export growth slows
CGTN
The TY Incheon container ship loaded with containers in Tokyo Bay near a shipping terminal in Yokohama, Japan, July 18, 2022. /CFP
The TY Incheon container ship loaded with containers in Tokyo Bay near a shipping terminal in Yokohama, Japan, July 18, 2022. /CFP

The TY Incheon container ship loaded with containers in Tokyo Bay near a shipping terminal in Yokohama, Japan, July 18, 2022. /CFP

Growth in Japan's merchandise exports slowed sharply in January amid weakening Chinese demand for cars and chipmaking machinery, stoking concern about a global slowdown and creating the country's largest trade deficit on record.

Trade figures issued on Thursday followed weaker-than-expected gross domestic product data, underscoring the challenge for the Bank of Japan in achieving growth led by private demand while sustaining inflation above two percent in a stable manner.

Aggressive interest rate rises in other advanced economies have cooled demand for Japanese products, which came under more downward pressure in January as China celebrated the Lunar New Year holiday.

"In a nutshell, exports are weakening," said Taro Saito, chief economist at NLI Research Institute. "The United States and Europe are not in a complete recession yet, but I think the world economy is probably going to get a little worse, so it will be even tougher in terms of exports."

The lifting of China's zero-COVID policy late last year, however, might somewhat brighten the outlook for a global economy teetering on the brink of a recession, he added.

The value of Japan's merchandise exports in January was 3.5 percent higher than a year earlier, Ministry of Finance data showed, slowing sharply from the previous month's annual gain of 11.5 percent but beating economists' median estimate for a 0.8 percent rise. 

Imports of goods were up 17.8 percent, compared with a rise of 20.7 percent in the previous month and a median forecast of 18.4 percent.

The result was a 3.49 trillion yen ($26.07 billion) deficit in merchandise trade in January, the biggest in records going back to 1979, the data showed. Imports of coal, liquefied natural gas and crude oil drove up overall import bills.

(Reuters with edits)

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