Japan's trade deficit rose nearly 10 percent in May to 993.9 billion yen (nearly $10.5 billion), highlighting the challenge Prime Minister Shinzo Abe faces in revitalizing manufacturing as industries increasingly shift production offshore, AP reported. Rising costs for imports due to the cheaper yen matched a 10 percent rebound in exports from a year earlier, the Finance Ministry reported Wednesday. A weakening in the yen's value has pushed up costs for imports of crude oil, natural gas and other commodities for this resource-scarce nation, but the deficit in May was bigger than most economists' estimates. Strong growth in exports to the U.S., China and the rest of Asia were offset by even stronger imports from the Middle East and China. While robust imports suggest that demand inside Japan is recovering, growing deficits show that Japan's trade environment has changed for good, said Eiji Ogawa, an economist at Hitotsubashi University in Tokyo. "Just a while ago, Japan always enjoyed a surplus," Ogawa said at a conference Wednesday. "It's now clear the deficits are not temporary, but structural." Japan's economy grew at a 4.1 percent annual rate in the first quarter of the year and is forecast to continue its recovery this year, boosted by government stimulus spending and aggressive monetary easing aimed at ending two decades of stagnation. But sustained growth will depend on getting Japan's cash-rich corporations to do more hiring and spending at home - a tough sell given the rapid aging and shrinking of the Japanese population. The May data show Japan's efforts to boost trade with the rest of Asia are yielding results, with exports rising 11 percent to 3.2 trillion yen ($33.7 billion), as imports climbed nearly 10 percent to 2.98 trillion yen ($31.4 billion).
