Japan Trade Deficit: Updated Oct. 10, 2023.

 Article Source: https://mainichi.jp/english/articles/20230615/p2g/00m/0bu/020000c

Article:

TOKYO (Kyodo) -- Japan's trade deficit in May shrank 42.0 percent from a year earlier to 1.37 trillion yen ($9.8 billion), due largely to a decline in fuel import costs, with slowing export growth casting a pall over the economy, government data showed Thursday.

Imports stood at 8.67 trillion yen, down 9.9 percent, while exports grew 0.6 percent to 7.29 trillion yen, a record for May, amid a weak yen.

Japan remained in the red for the 22nd straight month, highlighting the resource-scarce nation's reliance on imports.

Ideas:
The variance between the US dollar and the Japanese yen has been a negative for the Japanese economy related to imports. Take away the variance and imports prices might not be such a challenge for Japan.

Of course there are other challenges that affected imports such as logistics and shipping cost increases, delays in raw materials, and of course the war in Ukraine.

Most likely Japan will never solve its scarce resource challenge as it has to imports most products globally.

Article:

U.S. bound shipments of cars and machinery supported Japan's total exports, even as those of equipment and electronic components required to manufacture semiconductors declined, according to the Finance Ministry's preliminary data.

Crude oil, coal and liquefied natural gas imports fell, a year after their sharp increases in value terms helped widen the country's trade deficit amid supply concerns triggered by Russia's war in Ukraine.

Ideas:

Exporting to the US might be the only bright spot in world trade at this time, as maybe many economies might be in a stagnant, or low-growth phase.

Most likely the semiconductor industry at this time might still be experiencing period of shortages.

Back in 2020, in a BBC article, a German care CEO suggest that the semiconductor shortage could last two years or more.

Energy prices as of course dependent on happens Russia and the middle east. As OPEC just recently said the might reduce supplies and increases prices eventually.

Article:

Aggressive monetary tightening in the United States and Europe has raised concern about a global economic slowdown. The U.S. dollar was 4.8 percent higher against the yen than in May 2022, reflecting the diverging monetary policy paths of the Federal Reserve and the Bank of Japan.

"The easing of supply bottlenecks has helped boost car exports, but it's clear that overall export growth is losing steam," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.

"Initial expectations were that weakness in the United States and pent-up demand in China (after the end of its 'zero-COVID' policy) would cancel each other out. In reality, China's recovery has been far slower than expected," Kodama said.

Ideas:

Increasing the key rate in the US and the EU has some real side affects such as a slowdown in spending, a slowdown in borrowing and maybe even an slowdown in business activity overall.

There are always side affects and even for taking medicine. But maybe the central banks in the EU and the US feel they positives outweigh the negatives.

At the same time, maybe the BOJ feels differently as it has kept its rate at zero or near zero for many years, claiming the Japanese economy is will too weak for rate hikes.

The Chinese economy might not ever grow at the rate it did in the past, as most economies and they progress from developing to advanced never grow at the same rate. 

So maybe its time to reset the thinking about the Chinese economy and now expect less growth than before.

Article:

Japan had a trade surplus of 434.89 billion yen with the United States as exports grew 9.4 percent to 1.37 trillion yen and imports rose 1.5 percent to 938.89 billion yen.

With major trading partner China, Japan ran a trade deficit of 540.55 billion yen, remaining in the red for the 26th straight month, as imports fell 5.9 percent to 1.88 trillion yen and exports dropped 3.4 percent to 1.34 trillion yen.

Ideas:

The US economy, despite constant inflation challenges, seems to be somewhat strong with demand for many Japanese products still strong.

China has some real structural challenges that may take some time to fix and or the economy has just run out of steam or momentum and again may take some time to re-tool or reset as needed.

But just like South Korea, and its reliance on China, Japan too, maybe has become to reliant on exporting and or doing business in China, and needs to maybe re-tool how it does things and not be so reliant on China at this time.

Article:

Japan ran a 105.16 billion yen trade deficit with the rest of Asia including China, falling into the red for the first time in four months. A 141.03 billion yen deficit was reported with the European Union.

Japan's economy grew for the second straight quarter in January to March, despite the drag from weak exports.

Economists expect modest growth to continue in the current quarter to June, helped by relatively resilient consumption and capital spending despite uncertainty over the strength of the U.S. and Chinese economies.

Ideas:

World trade and exporting, except for maybe with the US, might be stagnant at this time and it might take some time for global/world trade to get back to the 2019 pre-pandemic level.

Any growth related to the Japanese economy is good as it doesn't grow like the US or other advanced countries that much, as it takes more and more resources for any kind of growth.

But being the 3rd largest economy in the world even a 1 percent growth rate is a lot of economic activity taking place in the economy.

Consumer spending or consumption is that the heart of any economy and Japanese needs a robust consumer spending public. 

Capital spending is also important as it shows companies are upbeat about the economy or future of the economy and continue to invest in capital projects.

Have a nice day and be safe!