In April, for the 21st month in a row, Japan racked up a trade deficit. However it was much less of a deficit compared to one year ago, due to a recovery among exports, official government data released Thursday showed.
The national trade deficit added up to 432.4 billion yen ($3.2 billion) in April, while exports gained 2.6% and imports fell by 2.3%, according to the nation’s Finance Ministry.
There was a recovery among vehicle shipments as well as the export of auto parts and electronic products, as the supply chain constrictions produced by the social restrictions over the Covid-19 pandemic abated.
Total import costs fell, as energy costs gradually eased compared to a year ago, when oil prices were spiking for a variety of reasons, not least of which was the geopolitical situation in Ukraine.
Almost all of Japan’s gasoline and natural gas are imported.
Altogether, the trade deficit of Japan in April shrank to roughly half of what it had been one year prior, at almost 855 billion yen.
As its currency, the yen has weakened, and that has placed upward pressure on imports. However a weak yen also increases the value of exports, by increasing the amounts of overseas earnings, once they are converted back into yen.
Presently the yen is trading at about 137 yen to a dollar, an increase from roughly 143 yen a year ago.
In April, Japan enjoyed a 794.8 billion yen ($5.8 billion) trade surplus with the United States, as export to the US increased 10.5%, while imports from the US increased only 1%.
With China, Japan had a trade deficit which ran 460.9 billion yen ($3.4 billion). Imports increased almost 15%, as exports fell 3%.
A slowdown in consumption in China has suppressed shipments to there, as Covid19 restrictions had continued to suppress demand.
Chief economist with SMBC Nikko Securities, Junichi Makino, pointed out that exports would likely pick up in the upcoming months as global demand picks up due to the final end to the Covid pandemic-era restrictions, and the cost of energy imports appear to have finally stabilized, and may fall in the coming months, off their record highs.
In a statement, he said, “There is ample room for improvement in the terms of trade.”
From 2011 to 2015, Japan posted annual trade deficits, following spikes in the cost of imports of oil, gas, and coal that resulted from the 2011 earthquake-tsunami that caused a nuclear disaster along its northeastern coast, which shut down the nation’s nuclear power plants. Since then only a handful of the nation’s nuclear power plants have been restarted. As a result, in recent years, the nation has fallen into a pattern of trade deficits.
However analysts note that as tourists return to Japan with the reopening of borders to international travel, exports should see a boost.
Covid-19 worries had restricted travel to Japan for months, however more recently, the streets of Tokyo have returned to bustling with crowds.
