Japanese trade deficit increase not expected

Just because the yen declines does not mean the trade balance will do what is expected. In fact, sometimes the unexpected is the normal. A decline in the yen should lead to more exports and greater domestic production. Exports are cheaper for foreign consumers. Similarly, imports become more expensive.  There is no J-curve here as Japanese consumers paid more to buy foreign goods.  Part of the whole Abenomics is to have cheap money from the BOJ increase inflationary expectations which will increase domestic demand, drive down the yen, and make exports cheaper. 

Exports grew in January by 9.5% but the import costs were much higher. Imports increased 25%. In this case, the demand for foreign energy given the cut in nuclear power has changed the trade dynamics. Many were expecting that the revival of the Japanese economy would be based on rising exports and that the weak yen policy was an extension of the "currency wars" around the globe. The numbers do not suggest this story is playing out as expected when you have inelastic demand for imports. The growth pattern in Japan for 2014 is not clear and this is going to cause more global uncertainty.