Japan's trade deficit stretches to third month as July imports and exports hit record highs
By Aboki Forex —
Japan's imports and exports hit record levels in July, but soaring energy costs and a weak yen pushed the trade deficit into a third straight month, official data shows. The Finance Ministry reported a trade deficit of 634.5 billion yen, about $4 billion, for July.
Imports jumped 27.8% from a year earlier to a seasonally adjusted 12.15 trillion yen, or $77 billion. The war in Iran has sent crude oil prices climbing, and Japan, which imports nearly all its oil, has been hit hard.
Record export growth
Exports also rose strongly, up 23.2% to 11.51 trillion yen, around $73 billion. Auto shipments to the United States and other countries stayed robust, and semiconductor and electronic device exports were healthy. Japan's exports have now grown every month for almost a year.
By value, both imports and exports were the highest for any July since comparable data became available in January 1979, according to the ministry.
Japan has long relied on oil from the Middle East through the Strait of Hormuz, but that route remains effectively closed. The government is now seeking alternative energy sources, including from the United States.
Weak yen and policy questions
The central bank has intervened to support the yen, but with little lasting impact. Analysts say the currency's weakness is tied to deeper issues, including Japan's shrinking economic clout.
The dollar was trading at about 158 yen recently. That is lower than July levels, when it cost more than 160 yen, but still higher than the 140 yen seen a year ago.
A weak yen is good news for big exporters like Toyota Motor Corp. because it inflates the value of overseas earnings. Toyota and other exporters have posted hefty profits recently. But it also makes raw materials, food and oil more expensive when bought abroad.
Analysts increasingly say Prime Minister Sanae Takaichi's policies have done little so far to turn the economy around. Still, she is likely to remain in office for months, with no election scheduled and her voter popularity relatively high.