Tokyo, Japan (4E) – Japan posted a record current-account deficit in November due to rising imports, providing a challenge to Prime Minister Shinzo Abe as he seeks to maintain the country’s economic rebound.
The current-account shortfall was at 592.8bn yen ($5.75bn) before seasonal adjustment, according to the Ministry of Finance report released Tuesday. The deficit marks the biggest on record since comparable data was gathered in 1985. The result was much larger compared with the 380.0bn yen deficit predicted by the Nikkei and The Wall Street Journal.
A weak yen and higher demand for energy due to the closure of nuclear plants are pushing Japan’s costs higher, representing challenges on the recovery that will also include the rise in the sales tax in April. Some economists worry that a sustained deficit would lead to a fiscal crisis that would undermine confidence in the Japanese government.
The current-account data also shows that the 15 percent weakening of the yen during Mr. Abe’s administration from January to November — which was supposed to boost exports by making them cheaper abroad – has not helped reverse trade deficits.
Tuesday’s figures underscore the risk that the world’s second-largest economy could become a deficit nation in the coming years, needing foreign funding to service its debt burden that is more than two times the size of the economy.