The Wall Street Journal reports, "Japan posted a record trade deficit in January, as imports of electronics components and raw materials surged and exporters failed to boost their sales overseas despite a weaker yen.
The ¥2.79 trillion ($27.3 billion) deficit is a setback for Prime Minister Shinzo Abe, who has touted the currency's depreciation as key to putting the world's third-largest economy on track for long-term growth. A weaker yen could potentially make Japan's exporters more competitive abroad, leading to higher profits and wages, and lifting employment".
"But economists say the benefits of the lower yen have been undercut by a longer-term trend of big manufacturers moving production overseas in order to be closer to their customer bases and reduce the risks of currency fluctuations. A pickup in exports is also dependent on overseas economies, including the U.S., improving, they say.
Weak gross domestic product figures released on Monday showed that overall growth in the economy unexpectedly slowed in the final months of 2013, in part because of weak sales abroad.
The trade figures underline that domestic demand continues to drive Japan's recovery, as a surge in imports pushed the overall trade deficit deeper into the red. Imports were up 25% from year-ago levels to ¥8.43 trillion, the highest on record since comparable data became available in 1979.
Part of the rise in spending has been attributed to rush demand to buy goods before an April sales tax increase. Some economists say that is helping to push up the import tab, especially for some high-value items such as cars. Imports of cars from Europe rose 25.4% on year, according to the trade data.
Economists also noted that the large trade deficit in January also reflects seasonal factors".
