Japan runs up trade deficit as exports and imports hit record highs

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) — Japan posted a trade deficit for the 15th consecutive month in October as imports and exports hit record highs amid soaring energy and food costs and a weaker yen. decrease.

The deficit, at 2.16 trillion yen ($15 billion), was the highest for the month of October since comparable data was first compiled in 1979, the finance ministry said Thursday.

The huge deficit came despite solid growth in exports, which rose 25.3% last month to 9 trillion yen ($64 billion) from a year ago. Among the products boosting exports are vehicles, medical products and electrical machinery, according to the ministry.

Imports totaled 11 trillion yen ($79 billion), up 53.5% from a year earlier. Japan is dependent on both energy and food imports at a time of mounting inflationary pressures globally.

political cartoons

Japan’s trade balance has fluctuated in recent years partly due to production disruptions and other issues related to the coronavirus pandemic.

The fall in the value of the Japanese currency is also key to the rising cost of imports. The US dollar, which traded at around 110 yen a year ago, has recently risen to nearly 150 yen. The decline has eased in recent weeks, with the dollar now trading at around 140 yen.

By country, October exports increased to the United States, as well as to Asia, particularly Indonesia, Vietnam and South Korea. Imports also increased from these countries, but also from Taiwan, Malaysia and Germany. Imports from the Middle East soared 87%.

The war in Ukraine and other global factors triggered the recent spike in energy prices. Japan imports almost all of its oil.

A weak yen tends to be a boon for Japanese export giants, like Toyota and Nintendo, by increasing the value of foreign earnings when converted into yen. But these advantages are often not enough to counter the rising costs of components, energy, raw materials and other goods.

Lower interest rates tend to lower that country’s currency relative to countries with higher interest rates. The Bank of Japan maintained a negative interest rate policy to maintain economic activity, while the US Federal Reserve repeatedly tightened monetary policy to combat mounting inflationary pressures.

But the cheap yen is almost certain to be a plus for tourism, a key income for the world’s third-largest economy. After essentially closing borders to tourists due to concerns over COVID-19 infections, Japan has now moved on to welcoming them.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.