Traditionally Japan is thought of as an export-driven economy; and the prowess of Japanese exports, from cars to photographic machines to electronics, are almost proverbial. In past years, Japan ran foreign trade surpluses and accumulated foreign exchange reserves among the largest in the world. But in the space of 12 months everything changed. In 2012, Japan recorded a trade deficit of 78 billion dollars (the current balance is still in surplus, but only thanks to the interest and dividends earned on foreign exchange reserves and Japanese investments abroad).
In 2012, some extraordinary factors were at work. Of Japan's 50 nuclear power plants only two are active (due to the events of March 2011) and Japan has had to import large quantities of oil and LNG for its energy needs. And exports to China have decreased due to well-known geopolitical factors. The yen did not help as, as mentioned several times, its historically high levels caused Japanese products to lose competitiveness. We can therefore understand Prime Minister Shinzo Abe's insistence on restarting the economy and mitigating the uncomfortable strength of the Rising Sun currency.
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