Japan Trade Deficit:

 Article Source:  https://mainichi.jp/english/articles/20220817/p2g/00m/0bu/022000c

Article:

TOKYO (Kyodo) -- Japan posted a trade deficit of 1.44 trillion yen ($10.7 billion) in July against a backdrop of rising import prices driven by Russia's invasion of Ukraine and the yen's weakness, remaining in the red for the 12th straight month, government data showed Wednesday.

Imports jumped 47.2 percent from a year earlier to 10.19 trillion yen, increasing for the 18th straight month and bringing the deficit to all-time high for July. Exports rose 19.0 percent to 8.75 trillion yen, up for the 17th month in a row.

The values of imports and exports were both the highest since comparable data became available in January 1979, according to the Finance Ministry's preliminary report.

Ideas:

 It should be remembered that these are values and not volume. If we were to look at the volume of imports and exports there might be a different situation.

As the yen continues to weak, it drives up the price or value of imports which make it look like imports are more thean exports.

The weak yen also helps the value of exports as for example a weak yen against a strong dollar will make the value of Japanese exports in the US have more value.

As the value of imports continues to increase those along the supply chain including the final consumer will have to pay more.

Just what the Japanese government can do remains to be seen besides price controls and government subsidies to try and curb inflation.

Article:

Analysts warn that the outflow of income under the prolonged trade deficit is hurting companies and households at home at a time when the broader economy shows few signs of sharp recovery from the novel coronavirus shock.

Imports soared as prices for crude oil from the United Arab Emirates and those for coal and liquefied natural gas from Australia were higher.

Exports gained due largely to brisk shipments of automobiles and semiconductor manufacturing devices to the United States and those of diesel fuel to the Philippines, the ministry said.

Ideas:

Importers have to pay for the imports which means money is leaving the Japanease economy which means companies and consumers now have less to spend in the Japanease economy overall.

The Japanese economy might not recover on its own for some time. which why now even more that ever the Japanese government needs to open the spickets to international tourism and allow everyone in who has been vaccinated and let them take advantage of the weak yen and let them spend like crazy.

Import prices don't look to be going down any time soon so the Japanease government or the Bank of Japan need to find ways to stem the continued price increases.

Japanese car sales, especially Toyota, have always been a bright spot for Japanese exports. Semiconductor shipments might still in a hazy situation as there are those who still say there is a shortage of chips and it might last one more year.

Article:

A ministry official attributed the expansion in imports and exports mainly to rising prices, while saying crude oil prices were around twice as high compared with the same month last year.

The value of petroleum imports rose to 1.14 trillion yen in the reporting month from a year earlier, increasing for the 16th consecutive month, the ministry said.

The average foreign exchange rate in July stood at 136.05 yen, with the yen sliding 23.1 percent against the dollar from the previous year, it added.

Ideas:

A weak yen again helps exports but it not so good for imports. Maybe at this time the Bank of Japan is trying to balance both imports and exports.

For example, because maybe the large exports companies have more sway in the Japanese economy, the Bank of Japan has been somewhat hesitant to make any moves against the weak yen, which benefits the exporters.

Perhaps they are hoping that even though there is a trade deficit, the value of imports more than the value of exports that the trade deficit won't get too far out of control.

You would think as oil and gas supplies from Russia might be compromised it might open up other supply chains globally and it might help prices. But that doesn't seem to be happening just yet.

Just who weak wil the Bank of Japan allow the yen to weak before anything is done. But then again maybe too much intervention in the exchange markets might not be a good idea, and maybe the idea is just let the markets move on their own.

Article:

With imports from the United States surging 46.9 percent to 1.06 trillion yen, increasing for the 17th consecutive month, Japan's trade surplus with the world's biggest economy decreased 22.4 percent from a year earlier to 512.8 billion yen.

By item, imports of U.S. liquefied natural gas and coal significantly rose amid Japan's efforts to reduce its dependence on Russian energy in response to Moscow's aggression against Ukraine, which started in late February.

Imports from and exports to China, the world's second largest economy, also rose, up 34.6 percent and 12.8 percent from the previous year, respectively.

Ideas:

As the US Federal Reserve continues to increase the key rate the US dollar and the Japanese yen get further apart which means the dollar keeps getting stronger and the yen keeps getting weaker which makes imports from the US cost even more.

But even though we see economies such as Japan trying to reduce its dependence on Russia the weak yen and the US dollar are not making it easier for the Japanese economy and import products.

China is still a major economic player despite its lockdown situation and Japanese companies need to find ways to keep doing business, despite the Chinese economy challenges.

Article:

Personal computers and mobile phones contributed to the surge in imports from China to 2.21 trillion yen, while electronic components including chips as well as audio visual devices helped exports climb to 1.78 trillion yen.

Looking ahead, Kazuma Kishikawa, an economist at Daiwa Institute of Research, said overall exports may improve at a moderate pace but that the positive effects of the yen's depreciation are unlikely to emerge immediately.

A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, while pushing up imports.

Ideas:

As Chinese products are becoming more popular and normal in all markets globally there might be more more Chinease products in the coming years.

Its kind of like Sony products and other Japanease products when they were very popular globally. The came the wave of Korean products such as LG and Samsung and now maybe the wave its going to be Chinese products.

The continued weak yen which eventually improves the value of Japanese exports. But right now there seems to be a slight downward trend in global trade which might be slowing down Japanease exports at the present time because of Ukraine situation and the continued global inflation situation.

Have a nice day and be safe!