Japan trade gap narrows, but returns to deficit in April
By ELAINE KURTENBACH, Associated Press
May 24, 2015 8:04 PM CDT

TOKYO (AP) — Japan's trade balance reverted to a deficit in April but narrowed sharply from the previous year as the plunge in oil prices cut fuel import costs.

The 53.4 billion yen ($439.6 million) deficit in April for the world's third-biggest economy compared with a 227.4 billion yen surplus in March, the first in several years.

But it was down nearly 94 percent from April 2014, when the deficit was 825.5 billion yen, the Finance Ministry reported Monday.

Exports rose 8 percent year-on-year to 6.55 trillion yen ($53.9 billion) while imports dropped 4.2 percent to 6.6 trillion yen ($54.3 billion).

Strong demand for machinery and cars pushed exports to the U.S., Japan's biggest market, up 21 percent from a year earlier to 1.36 trillion yen ($11.2 billion). Imports from the U.S. rose 24 percent, to 714.1 billion yen ($5.9 billion).

Vehicle and parts exports surged 23 percent, machinery exports climbed 19 percent and those of electrical machinery rose 17 percent, thanks to stronger growth in the U.S. and demand in other regions of Asia.

Japan's exports to China edged up 2.4 percent, to 1.21 trillion yen ($9.95 billion), a slower pace than usual due to slowing growth in Asia's biggest economy. Exports to all of Asia rose 6 percent, however, on rising shipments to Singapore, Vietnam and South Korea.

Japan's imports of crude oil climbed 9 percent in volume terms in April from a year earlier but fell nearly 35 percent in value, reflecting the plunge in oil prices from a peak of over $110 a barrel in 2013 to the current level of about $60 a barrel. Overall, oil, gas and other fuel imports dropped 29 percent from the year before.

Japan's trade balance slipped into deficit as oil and gas imports surged following the 2011 disaster at the Fukushima Dai-Ichi nuclear power plant, which led to closures of all of the country's reactors for safety checks.

Oil prices have recovered somewhat from their lows of below $50 a barrel. But natural gas prices tend to lag crude oil prices, and gas prices could fall by another 30 percent, reducing monthly imports by about 150 billion yen ($1.2 billion), Marcel Thieliant of Capital Economics said in a commentary.

A weakening in the value of the Japanese yen, which makes dollar-denominated oil imports more expensive for Japan, would likely push import costs higher, he said.

"Overall, therefore, the trade balance will likely remain in the red in coming months," he said.

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