Japan reported its 11th straight trade deficit in June on higher global energy and commodity prices amid a weakening yen.
Japanese imports soared 46.1% in the year to June, official data showed, above analysts’ estimate of a 45.7% jump.
Exports during the month rose 19.4% year-on-year, leading to a 1.3838 trillion ($9.99 billion) trade deficit.
The trade deficit last month was lower than the 1.510 trillion yen gap analysts expected in a poll.
Imports swelled due to a surge in oil shipments from Saudi Arabia and coal and liquefied natural gas (LNG) from Australia.
Imports of LNG from Malaysia and coal from Indonesia posted triple-digit surges, the data showed.
“Import volumes outpaced export volumes … so net trade should have been a small drag on [second-quarter gross domestic product] growth,” said Marcel Thieliant, senior Japan economist at Capital Economics.
Achilles Heel of Manufacturing Sector
“Car exports remain the Achilles heel of Japan’s manufacturing sector as they were only up 0.4% year-on-year, but that marked at least a pick-up from the 7.9% year-on-year fall in May,” he added.
By region, exports to China, Japan’s largest trading partner, rose 8.3% in the 12 months to June, recovering from two months of declines on stronger shipments of chip parts. China-bound exports of cars posted a sharp 23.2% year-on-year decline, the data showed.
Shipments bound for the US, the world’s largest economy, gained 15.7% in June, thanks to stronger exports of medical products.
The Bank of Japan is expected to maintain its ultra-loose monetary policy later on Thursday, a commitment that could lead to further falls in the yen.
While the yen’s slide has pushed up import costs, Japan’s economy is still projected to have returned to growth in the second quarter following a decline in January-March.
However, the recovery from the Covid-19 pandemic faces headwinds from slowing global growth, lower exports and persistent supply chain snags.
- Reuters with additional editing by Jim Pollard
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