Japan logs 634.5 billion yen trade deficit in July

In July, Japan experienced a trade deficit of 634.5 billion yen ($4 billion), marking the third consecutive month of negative trade balance. The weak yen played a significant role in driving up oil procurement costs, leading to a record-high import level. Meanwhile, exports grew on chip shipments.

Imports of crude oil rebounded to pre-pandemic levels, with a 5.5% increase from the previous year, reaching 12.11 million kiloliters. This was the first rise in four months, as Japan previously relied on the Middle East for over 90% of its oil imports. However, imports from the Middle East declined by 32.8% to 7.18 million kiloliters.

The costs of importing oil surged by 87.8% to 1.41 trillion yen due to higher crude oil prices and longer shipping routes. The cost of importing 1 kiloliter of crude oil increased by 78% to 116,380 yen.

Overall, Japan's trade deficit expanded in July, with both imports and exports posting double-digit gains. Imports rose 27.8% to 12.15 trillion yen, while exports increased 23.2% to 11.51 trillion yen, reaching the highest levels since January 1979. Exports grew at the highest pace since October 2022, driven by robust shipments of autos to the United States and semiconductor and other electronic devices to China.

Japan ran a trade deficit with China for the 64th consecutive month, with exports to China rising 25.8% to 2.01 trillion yen and imports increasing 26.2% to 2.78 trillion yen. The trade deficit with the United States also shrank for the eighth straight month, with exports to the US increasing 22% to 2.1 trillion yen and imports rising 58% to 1.81 trillion yen.