Japan's deficit hits record as economic growth slows

Japanese shoppers Analysts had been expecting a big boost in consumption ahead of tax increases

Related Stories

Japan's current account deficit widened to a record 1.5tn yen ($15bn; £8.7bn) in January, the largest since records began in 1985.

In further bad news, the country's economic growth figures were also revised downwards.

Japan's economy grew by 0.7% in 2013, down from an initial estimate of 1%.

Investors reacted with disappointment to the news, with the benchmark Nikkei 225 index falling by 95 points, or more than 0.6%.

From October to December 2013 Japan's economy grew by just 0.2%, after earlier estimates showed an increase of 0.3%.

Tax increase

The sluggish growth and growing deficit come just before a planned sales tax increase, scheduled to take effect in April.

Many economists had expected growth to pick up towards the end of 2013, as consumers spent ahead of the tax rise.

But the latest revisions show consumer spending increased by 0.4% in the fourth quarter of 2013, revised downwards from 0.5%.

Japan's trade gap also rose to a new record last month, increasing by 71% to 2.79tn yen in January, official figures showed.

That was largely down to weak export figures, which were impacted by global turmoil in emerging markets and a weakening yen.

Japanese Prime Minister Shinzo Abe says he plans to push ahead with the sales tax hike as a way to tackle Japan's debt.

However, to counteract the increase, which is scheduled to go from 5% to 8% - Mr Abe unveiled a stimulus package of 5.5tn yen in December.

More on This Story

Related Stories

More Business stories

RSS

Business Live

  1.  
    06:09: Royal Mail privatisation Radio 5 live

    Peter Hahn from Cass Business School explains that big institutional investors were approached in what's known as a "pilot fishing" exercise to ascertain a price Royal Mail. They, of course, were incentivised to quote a low price. Mr Hahn says that's a slightly simplified scenario - but was basically what happened. "IPOs (initial public offerings) are always more of an art than a science," Mr Hahn says on Radio 5 live.

     
  2.  
    06:07: Royal Mail privatisation
    Royal Mail"s Glasgow mail centre at St Rollox

    The government made £180m less from the £2bn sale of Royal Mail than it could have, a report commissioned by Business Secretary Vince Cable has said. It says shares could have been valued up to 30p more than the flotation price of 330p because of the high level of demand from banks and individuals. It said future government share sales should be more transparent and the pricing could be set at a later stage.

     
  3.  
    06:03: Markets boosted by US Fed

    US Federal Reserve chair Janet Yellen had some Christmas cheer for investors and borrowers on Wednesday when she signalled the central bank planned to be "patient" before raising interest rates. Most analysts had expected the Fed to signal its willingness to raise interest rates early next year but Ms Yellen's comments suggest the bank it wiling to wait a little longer. That's given markets a boost so far today.

     
  4.  
    06:02: Ben Morris Business Reporter

    If you want to get in touch you can email bizlivepage@bbc.co.uk or tweet us @bbcbusiness.

     
  5.  
    06:00: Matthew West Business Reporter

    Morning folks. It's going to be another busy morning by the looks of things. Yesterday's reassurance from the US Federal Reserve has cheered markets in Asia and even lifted the Russia rouble. Meanwhile, Royal Mail was "underpriced" by £180m, a report into its stock market flotation has found. There's lots more to come, so stay with us.

     

Features

From BBC Capital

Programmes

  • Digital candlesClick Watch

    Inside the 'Harry Potter' church, using technology to explore "digital empathy".

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.