Japan Central Bank: Economy Picking Up 05/22 07:23

   TOKYO (AP) -- Japan's central bank says the world's third-biggest economy is 
"picking up" as demand recovers in other countries and remains resilient at 
home, though the trade deficit widened in April, for the tenth straight month.

   The Bank of Japan ended a policy meeting on Wednesday with no change to its 
strategy of doubling the monetary base to reach a 2 percent inflation target 
and jolt the economy out of two decades of stagnation. That outcome was 
expected.

   The central bank said in a statement, though, that there is a "high degree 
of uncertainty concerning Japan's economy" and that prices show no signs yet of 
rebounding.

   Japan's economy grew 3.5 percent last quarter, but progress in increasing 
exports and boosting corporate investment and wages has lagged. A weakening in 
the Japanese yen linked to the aggressive monetary easing has helped stabilize 
exports, which climbed 3.8 percent in April from a year earlier, but it is also 
accentuating rising import costs.

   The trade deficit jumped nearly 70 percent over a year earlier to 879.9 
billion yen ($8.6 billion) in April, according to preliminary figures reported 
Wednesday by the Finance Ministry.

   Japan's trade deficit ballooned to a record $83.4 billion in the fiscal year 
that ended in March, as imports climbed and a surge in exports to the U.S. 
failed to offset the impact from territorial tensions with China and weak 
demand from crisis-stricken Europe.

   In April, exports totaled 5.78 trillion yen ($56.3 billion), but their 
increase was dwarfed by a 9.4 percent jump in imports, to 6.66 trillion yen 
($64.9 billion).

   The yen has slid in value by over 20 percent against the U.S. dollar and 
euro, in turn pushing up other currencies in relative value. That has raised 
costs for imports of crude oil, gas and other commodities for this 
resource-scarce nation.

   In April, the cost of oil imports slipped as crude oil prices moderated, but 
the value of imports of liquefied natural gas jumped 18 percent from a year 
earlier. Japan's demand for natural gas has ballooned since most of its nuclear 
power plants remain closed following the March 2011 accident at the Fukushima 
Dai-ichi plant. The deterioration in the trade balance is adding to pressure 
from the pro-nuclear government to restart more plants.

   Prime Minister Shinzo Abe has made a recovery of Japan's export industries a 
priority of his administration. While he's achieved the end to what the 
Japanese called the "endaka," or high yen era, longer-term structural reforms 
to improve Japan's international competitiveness are still pending.

   The U.S. remained Japan's biggest export market in April, as shipments rose 
15 percent to 1.1 trillion yen ($10.7 billion), while imports edged up less 
than 1 percent to 534 billion yen ($5.2 billion), leaving a surplus in of 563 
billion yen ($5.5 billion).

   The deficit with China rose 60 percent to 442 billion yen ($4.3 billion) as 
exports edged slightly higher from a year earlier to 998.4 billion yen ($9.7 
billion), while imports surged 13.3 percent to 1.44 trillion yen ($14 billion). 
Exports to the European Union fell 3.5 percent.


(KA)