Japan's trade deficit balloons to a record-high JPY980bn

Apparently, the surge in imports should be a one-off phenomenon.

According to DBS, trade deficit widened to a record large JPY 980bn (sa) in September. The surge in imports (10.0% MoM sa) should be a one-off phenomenon, as domestic producers brought forward fuel imports in prior to the government’s tax hikes on oil products that took effect on October 1st.

Here's more from DBS:

We expect imports to return to normal levels from October onwards. Trade deficit should narrow accordingly and the current account will stay in surplus.

We remain concerned about the outlook for exports and overall economic growth. Exports rose a modest 0.9% MoM sa in September, the first MoM increase since May; which however, remained far from offsetting the consecutive contraction in the past four months (-6% in total).

The improvement in exports is expected to remain slow and marginal in the near term. Demand from the G2 will stay weak. The anticipated recovery in the Chinese economy may not be translated into stronger imports from Japan, because of the anti-Japan sentiment prevailed in China.

In September, Japan’s exports to China plunged -14.1% YoY, particularly dragged down by motor vehicle exports.