Japan posts $10 billion trade deficit in June as energy imports rise

Stacked containers are seen at an industrial port in Tokyo, Japan February 17, 2022. REUTERS/Kim Kyung-Hoon

TOKYO, July 21 (Reuters) – Japan posted a trade deficit for the 11th consecutive month in June as high prices for energy and other commodities pushed up imports, underscoring growing economic pressures from the sharp drop in the yen and global inflation.

Imports jumped 46.1% in the year to June, Finance Ministry data showed on Thursday, slightly above median market forecasts for a gain of 45.7% in a poll Reuters.

That topped a 19.4% year-on-year increase in exports in the same month, leading to a trade deficit of 1.3838 trillion yen ($9.99 billion), the 11th consecutive month of deficits.

The June deficit was smaller than the 1.51 trillion yen gap expected in a Reuters poll.

Imports surged on a surge in shipments of oil from Saudi Arabia and coal and liquefied natural gas (LNG) from Australia. Imports of LNG from Malaysia and coal from Indonesia registered triple-digit increases, the data showed.

“Import volumes exceeded export volumes during the second quarter, so net trade should have slightly dampened GDP (gross domestic product) growth in the second quarter,” said Marcel Thieliant, Japanese economist. Principal at Capital Economics.

“Car exports remain the Achilles heel of Japanese manufacturing, as they grew only 0.4% year-on-year, but this marked at least a recovery from the 7.9% decline. year-on-year in May,” he added.

By region, exports to China, Japan’s largest trading partner, rose 8.3% in the 12 months to June, rebounding from two months of declines on stronger shipments of chip parts. Car exports to China fell sharply by 23.2 percent year-on-year, the data showed.

Shipments to the United States, the world’s largest economy, rose 15.7% in June, thanks to higher 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 declines in the yen. Read more

While the fall of the yen against the US dollar and other currencies this year has pushed up import costs, the Japanese economy is still expected to have returned to growth in the second quarter after a decline in January-March.

However, the recovery from the COVID-19 pandemic is facing headwinds from slowing global growth, declining exports and ongoing supply chain issues.

This has forced policymakers to maintain ample stimulus to the economy, bucking a global wave of rate hikes to rein in runaway inflation.

($1 = 138.4600 yen)

(History corrects comparison with predictions in paragraph 4.)

Reporting by Daniel Leussink; Editing by Sam Holmes

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