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Abe's Revival in Doubt?
Energy Woes Signal Long-Term Weakness for Japan

Japan’s monthly trade deficit rose to a record level in January, casting doubt on the vitality of Prime Minister Shinzo Abe’s economic agenda, as the BBC reports. A falling yen, combined with increased energy imports resulting from the nuclear shutdown after the 2011 Fukushima disaster, are the main drivers of the high trade deficit.

The Japanese yen has lost nearly 20% of its value against the US dollar over the past year, but the weak currency has also made imports more expensive and affected the country’s trade balance.

The world’s third-largest economy has had to import most of its energy needs after it shut all of its nuclear reactors in the aftermath of the tsunami and earthquake in 2011.

This points to a long-term weakness for Japan. The country has very few domestic energy sources. It relies on imports for more than 85 percent of its energy mix, nearly 30 percent of which came from nuclear before Fukushima. Today, Japan is the world’s largest importer of liquified natural gas, third largest oil importer, and second largest coal importer, and it is paying dearly for these honors.

Over the years, Japan’s economic success has been driven by culture rather than the kinds of natural riches found in powerhouses like China, the United States, Germany, or Russia. Abe is trying to re-invigorate Japan’s cultural engines for 21st century. The jury is still out on how successful that effort will be. Without a doubt, the stakes are very high.

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  • Jacksonian_Libertarian

    Japan was stupid to give into nuclear fears when the tsunami damaged Fukushima reactor melted. The Japanese have great respect for the law and the government, and would have accepted the explanation that for the time being the nuclear reactors would have to continue operating. But that precautions would be taken, and safer reactors like Thorium reactors would replace the present reactors. As far as I know only Japan and Germany have overreacted in this way, and they are both paying a steep price for their unfounded fears.

    • Andrew Allison

      I suspect that Hiroshima and Nagasaki have something to do with Japan’s decision. Germany’s is incomprehensible.

    • Tim Godfrey

      Japanese distrust their politicians as much as Americans. After Fukushima the public demanded that all plants be upgraded to address even small risks (another 2m on the sea wall at Fukushima would have prevented the accident). It takes time to make these upgrades (2017 the last I heard). There was an initial desire to get rid of nuclear but people are gradually realizing that this is not an option.

  • Bruce

    The Japanese used to have an honorable ethic (in most regards). However, they have become takers of government largesse, debt issuers, money printers and currency debauchers. Abenomics means continuing to bestow freebies when the demographics can’t support it. Countries that look for easy solutions such as money printing deserve the bad outcomes they get – as Japan and America will find out.

  • S Morris

    It’s hard to figure out how this is described as an “analysis” when it’s barely longer than something you’d read on Twitter.

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