Japan Current Account: Ideas Later.

Japan logs 635 bil. yen trade deficit in July, weak yen swells oil imports

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TOKYO (Kyodo) -- Japan logged a trade deficit of 634.5 billion yen ($4 billion) in July, marking the third straight month of red ink, as the weak yen inflated oil procurement costs and drove imports to a record high, while exports grew on chip shipments, government data showed Thursday.

The preliminary data from the Finance Ministry showed Japan's imports of crude oil recovered to the level before the United States and Israel launched attacks on Iran in late February, severely disrupting transportation through the Strait of Hormuz.

Overall imports of the fuel rose 5.5 percent from a year earlier to 12.11 million kiloliters, the first increase in four months. Japan previously depended on the Middle East for over 90 percent of its oil imports.

Imports of oil from the Middle East continued to decline, falling 32.8 percent to 7.18 million kiloliters, but shipments from the United States surged over nine fold to 4.39 million kl in July, the data showed.

But the procurement from alternate sources came at a higher cost. The value of overall imports of the fuel surged 87.8 percent to 1.41 trillion yen, reflecting elevated crude oil prices coupled with transportation and other costs from longer shipping routes.

Costs to import 1 kl of crude oil surged 78 percent to 116,380 yen, the data showed.

For July, the total trade deficit expanded with both imports and exports posting double-digit gains and rising to the highest levels since comparable data became available in January 1979.

Imports climbed 27.8 percent to 12.15 trillion yen from a year earlier as costs to purchase crude oil increased, while rising prices also boosted the value of shipments of semiconductors and other electronic devices, and nonferrous metals, the data showed.

Exports rose 23.2 percent to 11.51 trillion yen, advancing at the highest pace since October 2022, on robust shipments of autos to the United States and semiconductor and other electronic devices to China, it said.

By country, exports to the United States increased 22 percent to 2.1 trillion yen and imports jumped 58 percent to 1.81 trillion yen, with the size of the surplus shrinking for the eighth straight month.

Japan ran a trade deficit with China for the 64th straight month, with shipments bound for the Asian neighbor rising 25.8 percent to 2.01 trillion yen and purchases gaining 26.2 percent to 2.78 trillion yen.

Export and import figures for the United States and China were also the highest since data became available in 1979.

Article source:   https://mainichi.jp/english/articles/20260820/p2g/00m/0bu/010000c