Japan Posts Back-to-Back Current-Account Deficit in December

Japan posted back-to-back monthly current-account deficits for the first time since 1981, highlighting challenges for Prime Minister Shinzo Abe’s campaign to revive the economy.

The shortfall in the widest measure of the nation’s trade was 264.1 billion yen ($2.8 billion) in December, the Ministry of Finance said in Tokyo today. The median estimate of 23 economists surveyed by Bloomberg News was for a deficit of 144.2 billion yen.

Weakness in global demand, a spat with China and increased energy imports because of nuclear plant shutdowns are weighing on the world’s third-biggest economy as Abe pushes the Bank of Japan to end deflation and spur growth. The yen’s slide against the dollar is offering the prospect of an export revival.

“It will be three-to-six months before we see a substantial pick up in exports,” Takahiro Sekido, a strategist in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the Bank of Japan, said before the report. “The current-account position provides another incentive for Abe to continue his campaign.”

The yen has depreciated more than 14 percent since mid- November when the previous government announced an election that brought Abe to power. The currency was 0.1 percent higher at 93.58 per dollar as of 11:08 a.m. in Tokyo. The Nikkei 225 Stock Average was 1.1 percent lower after falling 0.9 percent yesterday. The benchmark was headed for its 13th week of gains.

The last consecutive monthly current-account deficit was in February 1981, according to the ministry. The 2012 annual current surplus of 4.7 trillion yen was the lowest since at least 1985, falling 51 percent from the previous year, the ministry said. The calculation method was changed in 1985, according to the ministry.

Forecast Raised

Toyota Motor Corp., the world’s biggest carmaker, on Feb. 5 raised its profit forecast for the year ending in March to a five-year high as the depreciating yen raises the value of its cars sold overseas. Mitsubishi Heavy Industries Ltd. this week raised its forecast for the same period.

Sony Corp. yesterday announced its eighth straight quarterly loss on sluggish sales of liquid-crystal display sets, digital cameras and personal computers.

Japan’s economy shrank in the second and third quarters of last year. The median forecast in a survey of economists by Bloomberg News is for a 0.4 percent annualized expansion in the three months through December, up from a 0.6 percent contraction in a survey last month.

China Dispute

Exports to China in 2012 fell 10.8 percent from 2011, as slower Chinese growth and a territorial dispute affected a merchandise trade relationship worth 26.5 trillion yen in 2012, according to ministry data.

Separately, China’s exports rose a more-than-expected 25 percent in January from a year earlier, the nation’s customs administration said today in Beijing.

Tokyo Electric Power Co. widened its loss forecast to 120 billion yen for the year ending in March this week as the shutdown of nuclear power plants and rising prices for energy imports weigh on the company’s bottom line.

BOJ Governor Masaaki Shirakawa said Feb. 6 he would step down on March 19, almost three weeks before the end of his term, accelerating a leadership transition that may boost Abe’s campaign for aggressive easing.

To contact the reporter on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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