Japan's nuclear shutdown results in record first-half trade deficit

Workers check containers loaded on trucks at a port in Tokyo July 25, 2012.

TOKYO (Reuters) - Japan amassed a record trade deficit of 2.5 trillion yen ($31.78 billion) in the first half of 2012, five times greater than the deficit a year earlier, due to a surge in fossil fuel imports following the closure of nuclear power plants.

The trade deficit was five times greater than the deficit in the first half of 2011, and reduced the current account surplus to its second lowest level on record.

The current account surplus tumbled 45.0 percent from the same period a year earlier to 3.4 trillion yen, as an earthquake, tsunami and nuclear disaster in March last year weighed on the balance of payments.

Lower global energy prices are expected to provide some relief for Japan's import bill in the second half of the year, which should improve the current account surplus.

Europe's debt crisis and China's economic slowdown pose some risks to future exports, but imports are likely to fall faster than exports in coming months due to cheaper fuel prices.

"Imports of crude oil and natural gas have probably peaked out given adjustments in oil prices, and exports are expected to recover, albeit with a delay, towards later this year. As such, decrease in current account surplus is likely to narrow," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"But if Chinese and U.S. economies fail to pick up, that would delay a recovery in Japanese exports and current account."

Figures for June, also released on Wednesday, made for more encouraging reading for economic policymakers fretting over the loss of cheap nuclear energy supplies.

The current account surplus fell 19.6 percent in June from a year earlier, less than the median estimate of a 23.0 percent annual decline and slower than a 62.6 percent tumble in the year to May.

Imports in June fell 1.2 percent from the same period a year earlier, largely due to declines in imports of coal and nonferrous metals.

This is the first decrease in 2-1/2 years and offered some hope that energy imports will start to fall in the second half of this year.

The Bank of Japan, which finishes a two-day policy meeting on Thursday, may escalate its warnings over slowing global demand and renewed gains in the yen, signalling its readiness to ease again if the economy's recovery comes under threat.

Japan's economy is expected to outperform most other developed nations this year with a boost from solid domestic demand, but analysts have slashed forecasts for factory output as the global slowdown becomes more pronounced, according to a Reuters poll last month. ($1 = 78.6600 Japanese yen)

(This story corrects typo in lead)

(Editing by Michael Perry and Simon Cameron-Moore)