By Daniel Leussink
TOKYO (Reuters) – Japan reported a larger-than-expected trade deficit in February as an energy-driven rise in import costs compounded vulnerabilities to the world’s third-largest economy.
Exports rose slightly less than expected despite an uptick in China-bound shipments, a worrying sign for an economy facing mounting uncertainty due to global supply constraints and the Russian invasion of Ukraine.
Imports rose 34.0% in the year to February, Treasury Department data showed Wednesday, above an average market forecast for a 28.0% increase in a Reuters poll.
That surpassed a 19.1% year-over-year increase in exports in February, resulting in a trade deficit of 668.3 billion yen ($5.65 billion), larger than the 112.6 billion yen deficit that was expected in a Reuters poll.
However, the February deficit was smaller than the 2.19 trillion yen gap in January, the largest in one month in eight years.
By region, exports to China, Japan’s largest trading partner, grew 25.8% in the 12 months to February on stronger shipments of semiconductor equipment to the country, following a Lunar New Year-related contraction in the previous month.
Exports to the United States, the world’s largest economy, grew 16.0% in February, thanks to stronger supplies of cars and semiconductor machines.
Japan’s economy recovered less than initially estimated in the last quarter of 2021, the government said last week, amid weaker growth in consumer and business spending.
The decline in growth in the fourth quarter was bad news for policymakers who need to support a fragile recovery as the crisis in Ukraine clouds the outlook for the global economy.
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