Japan recorded its largest current account deficit since the start of 2014 in January as a jump in oil import costs offset gains in investment income, with continuing uncertainty due to the Ukraine crisis and COVID-19 pandemic.
The current account data highlighted the dependence of Japan's resource-deficient economy on imports of commodities and raw materials, which caused trade deficit to widen.
Surging fuel costs drove up the value of imports by 39.9% in January from a year earlier, outpacing a 15.2% rise in exports. "Given such a temporary factor and a hefty investment income surplus, I don't think Japan's balance of payment will swing to deficit as a trend anytime soon," said Takashi Miwa, chief economist at Nomura Securities.
While a weak yen also helped inflate the cost of imports, its boost to export volumes was not as great as it once was due to an ongoing shift of exporters' production abroad, analysts say.