Japan's Trade Balance Shows 12 Consecutive Months of Deficits... Impact of Yen Depreciation and Soaring Energy Prices

[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Japan's trade balance has recorded a deficit for 12 consecutive months. This is due to an increase in import costs caused by a surge in international energy prices combined with the depreciation of the yen.

According to the preliminary trade statistics released by Japan's Ministry of Finance on the 17th, the trade deficit in July reached 1.4367 trillion yen (approximately 14.009 trillion KRW). This is the largest deficit since 1979.

Nihon Keizai reported that this record is the second-longest consecutive deficit following the 32-week deficit period after the 2011 Great East Japan Earthquake. The reasons for the 12-month continuous deficit include the surge in energy prices such as oil, coal, and liquefied natural gas (LNG) due to Russia's invasion of Ukraine, along with the depreciation of the yen.

According to the preliminary trade statistics, July imports increased by 47.2% compared to the same month last year, reaching 10.1895 trillion yen, marking a record high for five consecutive months.

In particular, imports of mineral fuels such as LNG exceeded 3 trillion yen, increasing 2.3 times compared to the same period last year. Nihon Keizai explained that the size of the July trade deficit is similar to the increase in mineral fuel imports of 1.7 trillion yen. Exports were recorded at 8.7528 trillion yen, up 19.0% year-on-year, also marking a record high.

By region, trade with China recorded a deficit of 424 billion yen, the largest deficit, which is seven times higher than the same month last year. Trade with the United States showed a surplus of 512.7 billion yen, down 22.4%, marking a decrease in surplus for the first time in two months.

Yoichi Takita, editorial board member of Nihon Keizai, stated, "Crude oil imports increased by only 3.8%, and LNG and coal imports actually decreased," but added, "Nevertheless, the increase in import costs means that payments for energy have flowed overseas," emphasizing the need for a shift in energy policy.

This content was produced with the assistance of AI translation services.