So Where’s the Magic of Abenomics? Japan Post Ninth Month of Trade Deficits

So where’s the much ballyhooed ‘competitiveness boosting’ magic of Abenomics?

Despite the BoJ’s announcement of the doubling of monetary base in 2 years, Japan’s trade balance continues to drift at the negative territory.

chart from tradingeconomics.com

From the Wall Street Journal,

Japan's merchandise trade balance logged a deficit of 362.4 billion yen ($3.69 billion) in March, stretching the run of deficits to a record nine months, as the weak yen pushed up import prices.

The result compares with a median forecast for a deficit of ¥430 billion in a survey of economists by Dow Jones Newswires and showed an improvement from a revised ¥779.5 billion deficit in February.

Exports also showed some recovery, rising 1.1% from the same period last year to ¥6.27 trillion ($63.9 billion), the Ministry of Finance data released Thursday showed. In February, exports had been down 2.9%.

While exports to China remained weak, falling 2.5% on year, sales to the U.S. jumped 7% as demand there began to rise amid a steady if somewhat subdued recovery.

Continuing to darken Japan's trade picture has been a sharp increase in energy imports. Crude oil imports were up 7% while liquefied natural gas imports were up 8.8%.

Japan has been forced to sharply increase its purchases of fossil fuels for electricity production ever since the March 2011 nuclear plant accident in northern Japan. The total cost has been pushed higher by the decline in the yen since mid-November. Japan's currency has fallen nearly 20% over that period.

Overall, imports were up 5.5% to ¥6.634 trillion.

Yes, admittedly there has been some improvements, but remember the potency of inflationism have usually been in the short term, which means dramatic improvements should have already been manifest. Apparently this has not been the case...perhaps not yet.

Instead, what has been happening is that Japanese firms have been tapping into foreign funds, and of a spike in the yields of short end spectrum of JGBs which has contributed to the market's sharp volatility.

Hardly any signs of improvements.