Japan trade deficit soars on weak yen, high oil prices

The deficit for November was double that for the same month the year before. Exports rose 20 per cent to 8.8 trillion yen (USD 64 billion)

PTIUpdated: Thursday, December 15, 2022, 03:43 PM IST
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Japan's trade deficit surged to over 2 trillion yen ( USD 15 billion) in November as higher costs for oil and a weak yen combined to push imports sharply higher.

It was the 16th straight month of red ink and a record high for the month of November. The country will likely post a record deficit for the year.

The deficit for November was double that for the same month the year before. Exports rose 20 per cent to 8.8 trillion yen (USD 64 billion) while imports surged 30 per cent from a year earlier to 10.9 trillion yen (USD 80 billion).

The world's third-largest economy has been recovering after Japan gradually loosened anti-virus precautions in the second half of the year and reopened its borders to foreign tourists in October.

But its export sector is under pressure from rising costs, shortages of computer chips and some other industrial inputs and weakening demand as central banks in major markets like the United States and European Union impose interest rate hikes to slow business activity and tame inflation.

Shipments to China rose only 3.5 per cent, as the country remained in the throes of its "zero-COVID" restrictions, which hurt business activity including manufacturing. Exports to all of Asia climbed nearly 12 per cent.

Japan's exports to the US jumped nearly 33 per cent, with the trade surplus rising 54per cent.

Exports of vehicles were sharply higher as shortages of computer chips and other parts eased. Meanwhile, imports of coal, gas and other fuels surged more than 60per cent, boosted by higher prices and the weaker yen.

Japan's imports from Russia dropped 36 per cent in November, with a sharp decline in shipments of oil, natural gas and timber.

Tokyo has joined other democracies in imposing sanctions against Moscow for its war on Ukraine, though it has said it will continue to import natural gas from a joint project in Sakhalin in Russia's Far East.

A weaker currency makes imports more expensive in yen-denominated terms. As the Federal Reserve and other central banks raised interest rates, Japan's currency fell in value against the US dollar and other currencies, while the Bank of Japan maintained its key interest rate at an ultra-low minus 0.1 percent.

Japan's domestic inflation has remained relatively low and with recessions looming elsewhere, the concern is that higher rates might derail the country's fragile economic recovery.

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