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Japan trade deficit grows as oil prices surge, yen drops

Yuri Kageyama

TOKYO (AP) – Japan’s trade deficit for the first half of this year totalled nearly JPY8 trillion (USD58 billion), because of surging oil prices and a sinking yen, brought on partly by the war in Ukraine, and weaker global demand.

The deficit for the period from January through June marked the second consecutive half-year of deficits. The deficit for the six months ended in June totalled JPY7.92 trillion (USD57 billion), according to Finance Ministry data released yesterday.

The deficit persisted even as imports for the six months shrank nearly 38 per cent to JPY53.86 trillion (USD390 billion), while exports grew 15 per cent to JPY45.94 trillion (USD332 billion).

In June, imports surged 46 per cent while exports grew 19 per cent, compared to the same month a year earlier, resulting in a trade deficit of JPY1.38 trillion (USD10 billion), the biggest for the month since 2014.

By country, imports from China jumped 33 per cent for the month on-year, while exports edged up eight per cent. Imports from the United States (US) grew 25 per cent, while exports rose 15 per cent. Imports from the Middle East, source of a large share of Japan’s energy supplies, jumped 125 per cent.

Chief Economist at SMBC Nikko Securities Junichi Makino noted that exports expanded in June supported by global demand for Japanese cars and computer chips.

The yen has been trading at about JPY138 to the dollar, down from about JPY110 a year ago, because Japan is sticking to a super-easy monetary policy of near-zero interest rates even as other nations, including the US, raise rates to combat inflation.

Oil prices have surged since Russia’s invasion of Ukraine in February and are now trading at around USD100 a barrel.

Cars for export park at a port in Yokohama, near Tokyo. PHOTO: AP