TOKYO: Japan fell into a huge $2.5 billion current account deficit in November as exports to China and debt-hit Europe slumped, official data showed Friday.
The world’s third-largest economy logged a 222.4 billion yen ($2.5 billion) shortfall in the current account, the broadest measure of Japan’s trade with the rest of the world, reversing a year-earlier surplus of 126.1 billion yen.
The yen plunged to a more than two-year low on the dollar Friday as the poor data ramped up expectations of more easing by the Bank of Japan when it holds a policy meeting this month.
Economists had expected a much smaller 33.5 billion yen monthly deficit, Dow Jones Newswires reported, and the latest figures marked the second-biggest deficit on record after January 2012.
It was also the first time Japan has logged a current account deficit in any month other than January, when trade tends to slow over New Year holidays.
The current account measures trade in goods, services, tourism and foreign investment with the latest data painting a gloomy picture after earlier November export data pointed to slowing in Japan’s shipments abroad.
The huge figure came as “exports mainly to the EU and China dropped”, the finance ministry said in a statement Friday.
The European Union is a key market for Japanese exports but the the continent’s debt crisis and weak economy have put pressure on demand while shipments to key trade partner China have slumped owing to a territorial row with Beijing, which sparked consumer boycotts of Japanese brands.
However, RBS Securities chief Japan economist Junko Nishioka said the deficit was likely to be temporary given Japan’s extensive foreign investment holdings, a key component of the current account.
“The overall current balance trend is likely to remain unchanged, as the nation still depends on income earnings such as direct and securities investments,” she added.