Japan posts $19.7 billion trade deficit in August as imports rise

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This January 12, 2018 file photo taken from a Mainichi Shimbun helicopter shows a container yard at Kobe Port in Hyogo Prefecture. (Mainichi)

TOKYO (Kyodo) — Japan posted a record trade deficit of 2.82 trillion yen ($19.7 billion) in August after rising energy prices and a sharp drop in the yen pushed up the value of imports at their highest level ever, the finance ministry announced on Thursday.

The country’s trade deficit has widened recently and August marked the 13th consecutive month of red ink, underscoring the impact of resource scarcity and heavy import dependence on Japan.

The deficit was larger than the previous record high of 2.8 trillion yen recorded in January 2014.

Imports jumped 49.9% to 10.88 trillion yen, the biggest increase in value since comparable data became available in 1979, driven by rising prices for energy sources such as crude oil , coal and liquefied natural gas.

Exports, meanwhile, jumped 22.1 percent to 8.06 trillion yen after higher shipments of cars and chip-related equipment.

“The weak yen is driving up (the cost of) imports at a time when energy prices are rising. Energy and grain prices have recently shown signs of stabilizing, but the impact of the sharp decline of the yen will continue for some time with a lag,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co.

Russia’s war against Ukraine has pushed up the prices of crude oil and other raw materials. The rapid weakening of the yen against the US dollar has compounded Japan’s woes by inflating import costs.

The price of imported crude oil nearly doubled from a year earlier to 95,608 yen per kilolitre.

The yen has fallen sharply in recent months. It was down 22.9% from a year earlier at 135.08 against the U.S. dollar in August, according to ministry data.

It traded in the 143 range near a 24-year low on Thursday, a day after caution grew over direct government intervention to prevent further decline.

“The concern is that the Chinese economy is slowing down and the United States is also being hit by the double whammy of inflation and rate hikes. This will also slow down Japanese exports to major trading partners and the economy. “, added Kodama.

Economists expect Japan’s economy to continue growing in the July-September quarter as the impact of the COVID-19 pandemic fades, but its pace will likely slow as domestic demand remains weak. and the acceleration of inflation is hitting households.

Strong external demand bodes well for Japan, boosting exports of cars, auto parts and other equipment. Aided by these items, Japan had a trade surplus of 471.5 billion yen with the United States.

Still, the pace of year-on-year growth was faster for imports than for exports with the United States growing 40.5% to 1.07 trillion yen and 33.8% to 1. 54 trillion yen, respectively.

However, with another major trading partner, China, Japan recorded a trade deficit of 576.9 billion yen. Imports rose 34.2% to 2.19 trillion yen, helped by those of clothing, smartphones and televisions, outpacing a 13.5% gain in exports to 1.61 trillion yen, driven by hybrid cars, audio equipment and others.

A trade deficit of 130.8 billion yen was reported with the European Union, lifted by cars and timber.

Imports from the region fell 1.2 percent from a year earlier to 852.6 billion yen, while exports rose 16.7 percent to 721.8 billion yen.

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