April 21,2014,10.00 JST

Japan clocks another super-sized trade deficit in March

Japan’s seasonally adjusted trade deficit in March 2014 was 1.7 trillion yen. The robust domestic demand is pulling in imports while exports continue to stagnate, failing to take advantage of the weaker yen. Why is Japan suffering from trade deficits? In our view, there are two principal reasons. The first is the under-capacity in Japan. Private capital investment has never recovered after the collapse following the Lehman shock. The second is the surge in domestic demand since 2013. The robust domestic demand fueled by consumption and public investment are overwhelming the production capacity in Japan, necessitating imports from overseas. . 

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