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Japan's current account deficit hits record $5.4B in November

Jan. 13, 2014 at 9:40 PM   |   Comments

TOKYO, Jan. 13 (UPI) -- Japan's November current account deficit, driven by higher import costs, hit a record $5.74 billion, the Finance Ministry said Tuesday.

The November data, which was the second straight monthly deficit, was the highest since comparable figures became available in 1985, the ministry said.

The current account is the broadest measure of a country's trade with other nations. A deficit results when money spent on imports of goods and services and money transfers exceed receipts from exports and financial transfers.

Though a weaker yen helps boost exports, it also drives up import costs, such as energy whose demand has been rising since shut downs of nuclear plants in the wake of the March 2011 earthquake-tsunami that destroyed the Fukushima-Daiichi nuclear plant. The yen has declined about 16 percent since the past year as a result of various stimulus measures by the central bank and the government to lift the economy out of its 15-year deflation.

The November deficit was wider than the 380 billion yen deficit forecast by the Wall Street Journal, the newspaper said.

Staring April, Japan's sales tax rate is set to go up to 8 percent from the current 5 percent.

The Journal quoted economists as saying the November deficit indicated a rise in domestic demand ahead of the sales tax increase.

"Domestic demand has strengthened ahead of the sales tax hike, pushing up imports. This is likely to continue until March," Takeshi Minami, chief economist at Norinchukin Research Institute, told the Journal. "Current accounts are likely to return to positive after March although we will likely continue to see trade deficits."

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