Japan's trade deficit narrows sharply in 2015

Japan's trade deficit narrowed sharply in 2015 as tumbling oil prices took pressure off its soaring post-Fukushima energy import bill, official data showed Monday, while autos led a pick-up in exports. The deficit decline offered up some good news for Prime Minister Shinzo Abe as he struggles to stoke growth and ahead of a test to his leadership in upper house elections this summer.

Stronger demand in some key markets, including the United States, and a sharply weaker yen boosted exports from the world's number three economy, the finance ministry said.

The figures showed Japan recorded its fifth-straight annual trade deficit, but the latest figure narrowed by 78 percent from 2014 to 2.83 trillion yen ($23.8 billion). Auto exports surged 10.3 percent from a year ago, while the value of crude oil imports dropped 41.0 percent.

For December alone, the nation saw a trade surplus of 140 billion yen, returning to the black for the first time in two months. Japan remains highly dependent on energy imports to power the economy, but a big drop in oil prices over the summer has taken pressure off the cost of its energy needs.

The nation has kept most of its nuclear reactors closed since a tsunami and earthquake triggered meltdowns at the Fukushima plant in 2011. The accident forced Japan to turn to pricey imported fossil fuels to keep the lights on, leading to a string of big trade deficits.

"The continued weakening in energy prices is exacerbating the fall in import prices," said Marcel Thieliant at research house Capital Economics.

Abe has pushed to restart nuclear plants, backed by Japan's business community, but the public is sharply divided with many opposed to returning to atomic power. Several reactors have been restart- ed since the worst atomic accident in a generation. "The resumption of nuclear power plants had only a very marginal impact on the 2015 trade statistics," Junko Nishioka, chief economist at Sumitomo Mitsui Banking. "But if the Abe administration moves forward (on more restarts) in the near term, it would have...further impact toward reducing the trade deficit." But Nishioka warned that overseas demand, particularly in China, was at risk in the face of a struggling global economy. "Given the market turmoil, it will likely dampen business confidence," Nishioka added.

Falling oil prices have also depressed oil- related investment in the United States, denting demand for Japanese construction machinery, said Junichi Makino, chief economist at SMBC Nikko Securities. "Looking forward, automobile demand is expected to stay solid, while a pickup is expected for electronics," Makino added.