Japan Trade Deficit:

 Article Source:

 https://mainichi.jp/english/articles/20221117/p2g/00m/0bu/024000c

Article:

TOKYO (Kyodo) -- Japan posted a 2.16 trillion yen ($15.5 billion) trade deficit in October, a record for the month, as imports surged to their largest amount on higher energy prices and the yen's sharp slide, far outpacing exports, Finance Ministry data showed Thursday.

Imports, which were at a historical record high, jumped 53.5 percent from a year earlier to 11.16 trillion yen led by crude oil, liquefied natural gas and coal. Exports gained 25.3 percent to 9.00 trillion yen after shipments of cars and electronics components increased, highlighting strong overseas demand.

Comparable data became available in 1979.

Ideas:

Even though imports surged due to the weak yen, as long as exports are in demand Japan doesn't need to worry too much.

As the BOJ has said the increase in raw materials and energy inflation is only as temporary situation and Japan only need to worry as long as there is strong demand for Japanese exports.

And if the BOJ can maintain control of the weak yen and not let it get any lower the variance between the yen and dollar should be manageable.

Article:

For the past six months, Japan has seen a record trade deficit for each month, as rising energy and raw material costs have dealt a blow to the resource-scarce nation. October marked the 15th straight month of red ink.

The yen's rapid weakening has magnified that impact, prompting Japan to intervene in the foreign exchange market by buying the yen for U.S. dollars to slow the Japanese currency's decline, likely on multiple occasions in October.

"The weaker yen boosted imports, and exports are falling in terms of volume. Japan's trade balance will likely remain deeply in the red for the coming months, though the deficit may become smaller," said Kota Suzuki, an economist at Daiwa Securities Co.

Ideas:

Even though exports might be falling in terms of volume, it's still enough as there as there is strong demand for Japanese products. 

As the BOJ has said, again, the increase in inflation is most likely just a temporary situation and could be smoothed over soon meaning inflation will begin to stabilize and then eventually begin to decrease.

Imports and exports are both a positive and negative situation for the Japan. While the weak yen is good for exporters, they have at the same time have to deal with increase energy and raw material costs in their production plants. 

Article:

Higher auto exports to the United States helped Japan report a trade surplus of 720.36 billion yen. Both exports to and imports from the United States hit their highest levels for the month.

U.S.-bound exports climbed 36.5 percent to 1.78 trillion yen while imports advanced 47.1 percent to 1.06 trillion yen.

Increased imports of smartphones and personal computers led Japan to post a trade deficit of 671.35 billion yen with China, a major trading partner.

Ideas:

Thankfully for Japan the demand in the US seems to be very strong despite the inflation issues. 

Once again Japan shouldn't be too concerned with the value or amount of imports from the US but continue to focus on exports to the US which seem to be very strong at this time.

The situation with China is a different story as China might still be experiencing supply challenges and there is still the potential with shutdowns due to the virus situation.

Related to smartphones and personal computers companies like Lenovo and Huawei and others for smartphones must be relatively strong in Japan related to demand for their products. 

Which kind of got me thinking has Japan given up on the smartphone market and companies like Samsung and now Chinese smartphones seems to be increasing in Japan.

Article:

Imports from China jumped 39.3 percent to 2.39 trillion yen, which compares with exports that rose 7.7 percent to 1.72 trillion yen.

Japan's trade deficit came to 152.97 billion yen with the rest of Asia, including China, and 214.11 billion yen with the European Union.

The weaker yen has been eating into national wealth in recent months, with the nation's current account surplus in the six months to September shrinking to an eight-year low of 4.85 trillion yen, more than halving from a year earlier.

Ideas:

If Japan is concerned about its current account then yes, they should be concerned about the trade deficit. But again as long as exports can remain strong it should be a temporary situation.

Japan had many years, if not decades of trade surpluses so they should still have a strong current account even though the Japanese government are usually big spenders compared to other countries.

As as trade remains strong and the global economy remains somewhat strong Japan should not worry too much even though its has a year or two of trade deficits.

Article:

The value of imported crude oil per kiloliter gained 79.4 percent in October from a year earlier in yen terms, according to the ministry.

Daiwa Securities' Suzuki said the impact of the weaker yen on exports and imports will become "neutral," as the currency's rapid depreciation has temporarily halted and commodity prices, which had surged earlier, have stabilized. But he is cautious about the outlook for exports.

"Shipments to China are expected to decrease despite expectations that Beijing will end its zero-COVID policy because real estate troubles remain and there are concerns about economic slowdowns in the United State and Europe," Suzuki said.

Ideas:

As always there are positives and negative in all economies and the imports and exports will balance themselves out over time.

Yes, there should be some caution as 2023 has the potential for some kind of recession, either a weak recession or a much stronger recession situation.

It's interesting again how much, including China, how integrated the global economy is when real estate challenges in China worry global investors. And of course again there is the potential for a recession in 2023 in the US and the EU.

Article:

Japan's economy unexpectedly contracted in the three months to September, weighed down by soaring import costs that count as a negative for gross domestic product, and slowing growth in consumption.

Aggressive monetary tightening in the United States and other advanced economies have raised concerns about slowing exports from Japan going forward, coinciding with worries about a slowing Chinese economy due to its zero-COVID policy and property woes.

Ideas:

As the Japanese economy opened up more and more businesses and consumers increased their activity eventually reality set in with inflation increasing they most likely reduced their activity despite the enthusiasm before that time.

Consumption or consumer spending has never been a strong point for the Japanese economy as the Japanese, for the most part, are not big spenders like consumers in the US.

If wage increases could ever grow to the point that consumers and workers really feel good with with their extra income then maybe consumer demand and consumer spending can play a bigger role in economic growth in the Japanese economy.

Have a nice day and be safe!