Japan logged trade deficit for third consecutive month in July

Japan's exports surged by 23.2% year-on-year in July, reaching a record high of 11.5 trillion yen (US$72.62 billion), according to data released on Thursday. This marked an increase from the previous month's 19.3% growth, surpassing market forecasts of a 19.9% rise. The strong export figures, following Japan's economy expanding for a third consecutive quarter in April-June, suggest global demand is robust.

The Bank of Japan may consider normalizing monetary policy, potentially raising interest rates as early as September. US exports increased by 22%, while shipments to China grew by 25.8%. Imports rose by 27.8% year-on-year, exceeding expectations, leading to a trade deficit of 634.5 billion yen in July. The Middle East war disrupted shipping in the Strait of Hormuz, causing crude oil and other commodity prices to soar, which increased Japan's import bill.

Despite this, export values have been supported by higher prices, as many manufacturers can pass on costs to overseas customers due to ongoing supply chain impacts.