Japan’s trade deficit shrank in April as imports rose the least in 16 months after the first sales-tax increase in 17 years crimped consumer spending.
Inbound shipments rose 3.4 percent from a year earlier, the Ministry of Finance said today in Tokyo. Exports increased 5.1 percent, leaving a deficit of 808.9 billion yen ($8 billion), down 7.8 percent from a year earlier.
Reductions in the nation’s trade deficits, which extended their record run to 22 months, would help Prime Minister Shinzo Abe’s efforts to drive a sustained economic recovery and an exit from deflation. So far, the nation’s export gains have been limited, even with a 17 percent slide in the yen against the dollar since he took office in December 2012.
“Imports boosted by front-loaded demand before the sales-tax hike dropped off in April,” Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo, said before the report. “We have to wait for exports to recover strongly before we will see a real drop in the trade deficit and that situation is still way out of sight,” said Shinke, the most accurate forecaster of Japan’s economy for two years running in data compiled by Bloomberg.
The Topix index of shares was down 0.5 percent at 10:40 a.m. in Tokyo, as the yen rose 0.1 percent against the dollar to 101.24.
The trade shortfall was wider than a 646.3 billion yen gap forecast in a survey of 29 economists by Bloomberg News.
Abe increased the sales levy to 8 percent in April from 5 percent, as he tries to contain the world’s biggest debt burden. An environmental tax on energy, which also took effect from April 1, undercut imports of oil and coal, according to Nomura Holdings Inc. economists led by Minoru Nogimori, writing in a research report before the data.
Exports are likely to start increasing moderately once overseas economies improve and the effects of temporary factors such as U.S. winter weather abate, Kuroda said last week in a speech. The BOJ is forecast to keep monetary policy unchanged later today, according to all economists in a Bloomberg News survey.