Japan's first annual trade deficit in more than 30 years calls into question how much longer the country can rely on exports to help finance a huge public debt without having to turn to fickle foreign investors.
The aftermath of the March earthquake raised fuel import costs while slowing global growth and the yen's strength hit exports, data released on today showed, swinging the 2011 trade balance into deficit.
Few analysts expect Japan to immediately run a deficit in the current account, which includes trade and returns on the country's huge portfolio of investments abroad. A steady inflow of profits and capital gains from overseas still outweighs the trade deficit.
But the trade figures underscore a broader trend of Japan's declining global competitive edge and a rapidly ageing population, compounding the immediate problem of increased reliance on fuel imports due to the loss of nuclear power.
Only four of the country's 54 nuclear power reactors are running due to public safety fears following the March disaster.
