Exporter Japan eyes first trade deficit in 3 decades
Japan probably produced its first trade deficit last year in more than three decades as energy imports surged to cover for the loss of nuclear power following the Fukushima disaster, a major blow to an economy built on its exports prowess.
For decades Japan used an exports-orientated economic policy to build up global brand names such as Toyota, Sony and Canon and a manufacturing might that was the envy of the world.
Official trade figures due for release on Wednesday are expected to show that Japan swung to a deficit for the first time since 1980, as utilities purchased fossil fuels for power stations to make up for the loss of nuclear power.
The population is not in favor of the double-the-sales-tax by 2016 plan. And indeed, it will suppress consumption. But their fiscal problems are so severe that they must be dealt with. The only reason this has held up so long was because of their trade surplus. You can afford to run large fiscal deficits if they are mostly offset by trade surpluses.
They've got a few years before the Grim Debt Reaper gets around to them, but it doesn't seem like the global economy will help them, the 3/11 disaster has greatly increased their fiscal burden, they cannot really afford to pay for the renewable energy schemes either, and they can't afford to modernize their power networks.
Their demographics are awful, and companies can't handle the strong yen and will continue to move production offshore, so what's left? Anyway, most of the government debt is held internally, so defaulting on it is just another blow to the domestic economy.