Boston, MA -- (ReleaseWire) -- 05/01/2014 -- Japan's gross domestic product (GDP) grew at the rate of 1% in the fourth quarter of 2013, owing to a surge in imports and slow growth in exports, according to the Cabinet Office in Tokyo. Increase in capital expenditure and consumption in the country failed to spur growth as trade deficit widened due to the rise in imports. The slow growth of the economy adds to mounting concerns over risks associated with the sales tax raise slated for April. Investment went up by 1.3% quarter-on-quarter during Q4, and consumer expenditure increased by 0.5%. Exports increased by just 0.4% while imports grew by 3.5%. The slowerthan- forecast economic growth has fuelled speculation that the Japanese central bank will infuse additional financial stimulus in the coming months to shore up the GDP.
While it is difficult to tell what state Japan's trade accounts would be in if the yen had remained strong, it is likely that the trade deficit would have been even larger than we are seeing currently. However, from a structural perspective, policies aimed at undermining the value of the yen, maintaining a large fiscal deficit, and forcing up inflation are likely to be counterproductive in their efforts to maintain a stable current account, and could in fact lead to a surging current account deficit.
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Indeed, they will continue to reduce the domestic savings rate while fostering unproductive investment, thus lowering the external surplus. Japan's private sector surplus has been very large in recent years, but a combination of demographic and policy-driven forces are likely to see this surplus decline sharply over the coming years. The only way Japan is likely to maintain a current account surplus under its current policy mix is in the event of a collapse in imports, which is most likely to come about through a domestic recession.
In 2014, we anticipate the Port of Nagoya leading the way in terms of year-on-year (y-o-y) tonnage throughput (just over 3%), while the Port of Kobe is set to enjoy the best level of annual growth in the container throughput sphere (5.54%).
Headline Industry Data
- 2014 Port of Nagoya tonnage forecast to grow by 3.24% to reach 212.254mn tonnes, up from 2013's 1.47% growth rate. Box traffic at the same port will grow by 2.62% to 2.752mn twenty-foot equivalents (TEUs), up from 1.00% in the preceding year.
- The Port of Tokyo will remain Japan's largest container terminal, with box traffic gaining 4.01% to 5.198mn TEUs in 2014, marginally down from 4.31% growth in 2013.
- The Port of Yokohama will see a 2.91% tonnage growth to 122.423mn tonnes (up from 2.00% contraction in the preceding year) in 2014, and 4.22% container growth to 3.022mn TEUs (up from 5.00% contraction in 2013).
- 2014 total trade growth forecast to expand by 4.65% in real terms. Import growth at 6.5% will exceed exports at 2.8%.
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