TOKYO (AP) — Japan's trade deficit ballooned to a record 12.8 trillion yen ($109 billion) last year as a weakening yen pushed the cost of imports higher despite a moderate recovery in exports.
Preliminary data from the Finance Ministry released Monday showed Japan's exports rose 4.8 percent to 73.1 trillion yen ($620 billion) in 2014 while imports climbed 5.7 percent to 85.9 trillion yen ($763.7 billion). The trade deficit rose by 11.4 percent from the 11.5 trillion yen ($97.7 billion) gap in 2013.
The data show exports from the world's third-largest economy rising nearly twice as fast in the latter half of the year than in the first half, while the increase in imports fell sharply, suggesting the deficit will narrow in coming months.
The Japanese yen has weakened over the past year to about 117 yen to the dollar compared with about 100 yen in early 2014. That raises the value of Japan's exports in yen terms. But it also pushes up costs for imports of fuel and food.
Japan ran trade surpluses for decades until its nuclear reactors were idled following a disaster at the Fukushima Dai-Ichi power plant in March 2011. Imports of oil and gas rose to compensate for the lost nuclear power capacity.
The more than 60 percent plunge in oil prices is a boon to Japanese businesses that have been pinched by rising energy costs. But the impact was not fully reflected in the most recent data, said Marcel Thieliant of Capital Economics.
"Lower energy prices may briefly return the trade balance to surplus in coming months, before a weaker yen and a rebound in the oil price push it back into deficit," Thieliant said in a commentary.
But Thielient also said exports may slow in coming months.
Japan's exports of vehicles, a major component of its total overseas business, fell 1.4 percent in volume terms in 2014 from a year earlier, though the value rose nearly 5 percent to 10.9 trillion yen ($92.6 billion).
Electrical machinery exports rose 5 percent and exports of other machinery such as power generating equipment increased 6.4 percent, accounting for more than a quarter of total exports last year.
Exports to China rose 15 percent last year but are expected to slow as the economy of Japan's neighbor cools after three decades of torrid growth.
Japan's exports to the United States, its biggest single export market, rose 5.6 percent last year to 13.6 trillion yen ($115.5 billion) while imports jumped nearly 11 percent to 7.5 trillion yen ($63.7 billion). The resulting trade surplus was nearly level with that of 2013, at 6.1 trillion yen ($51.8 billion).
Elaine Kurtenbach on Twitter: www.twitter.com/ekurtenbach