Japan Posts Trade Surplus But There Is Doubt It Will Be Sustainable

Tuesday, July 24, 2012 23:09
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Japan Posts Trade Surplus But There Is Doubt It Will Be Sustainable

Tags: oil | trade | world economy

Japan’s trade deficit has disappeared. A recent report actually posted a trade surplus because lower oil prices reduced imports. Whether the surplus is sustainable is in question since lower oil prices also indicate weaker demand for oil while boosting Japan’s currency.

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The report is notable because it reversed a 2.9 trillion yen deficit reported for the month of June. Japan’s largest trading partner is China. Japan’s government is more pessimistic about China’s growth prospects. The International Monetary Fund (IMF) has lowered its global growth forecasts based on Europe’s continued debt problems and China’s slower growth.
 
Meanwhile, Japan’s government may extend its 10 trillion yen lending program beyond its expiration date to help small businesses take advantage of the strength in the country’s currency for foreign mergers and acquisitions. The program has so far financed $8.9 billion worth of projects, about 15 in all.
 
Meanwhile, China just agreed to acquire Canadian oil company Nexen, Inc. The move will add to China’s energy reserves while it considers the possibilities of shale gas exploration.

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