Japanese trade abroad drops after tax hike

EXPORTERS in Japan reported a small decline in May, the first on record for the country’s businesses in 15 months.

Export values dropped from ¥5.608 trillion (£32.39bn) from ¥5.765 trillion in May 2013. However, imports fell more quickly, down 3.6 per cent to ¥6.517bn over the same period.

As a result, the trade deficit narrowed to ¥908.96bn, an 8.3 per cent decline year-on-year. By region, the largest drop was seen in exports to Australia and Singapore.

Emily Nicol, of Daiwa Capital Markets, called the news “disappointing reading”, adding that there was “little evidence to suggest that exports will be able to provide a much needed source of growth over the coming quarter”.

Some analysts had predicted that a recent hike in Japan’s consumption tax would reduce the particularly strong growth in domestic demand and imports, helping to reduce the country’s trade deficit.

Although the recent burst of growth from Prime Minister Shinzo Abe’s radical “Abenomics” policies and the subsequent weakening of the yen have helped to raise exports, import values have grown at a much faster pace.