The trade deficit was about $7 billion for the full year. The increase in the value of the yen versus other currencies, particularly the US dollar, was an important factor. However, this increase wasn’t due to a global view of the yen as a safe haven, but rather to the reversal of carry trade strategies as the US reduced its interest rates to levels comparable to those that Japan has had in place for many years. The value of the yen versus other currencies has been artificially low due to BoJ interest rate policy and currency intervention by Japanese authorities to protect its export sector from the damage that an increase in the value of the yen would cause to export volumes. Now we are seeing the full effect of the unwinding of these policies.
Japan’s banking system has never really exited zombie status, although some restructuring has taken place; the evidence for this is the debate in Parliament over setting up a fund to buy stock from banks to protect them from the decline in the equity markets.