Japan’s trade deficit widened in April, increasing by almost 8 percent compared to the previous year as the yen’s depreciation led to a surge in imports, offsetting the gains from increased exports, according to government data released on Wednesday.
The Ministry of Finance reported that exports reached 8.98 trillion yen ($57 billion) and imports totaled 9.4 trillion yen ($60 billion), both marking an 8 percent increase from the previous year. This resulted in a trade deficit of 462.5 billion yen ($3 billion) for the month.
Exports to Asia, the U.S., and the Middle East saw significant growth, while exports to Europe remained stagnant. Imports from the U.S. spiked by nearly 30 percent, with imports from the Middle East, primarily oil and gas, jumping by 15 percent.
Vehicle exports surged by 24 percent and electrical machinery exports were up by 16 percent. Meanwhile, imports of mechanical parts saw a sharp increase in demand for auto parts and computer chips. The recovery of Japan’s auto production from pandemic-related disruptions in global supply chains contributed to this increase.
The rise in imports can be attributed to the U.S. dollar’s strength against the yen. The dollar has been trading at around 156 yen, up from 139 yen a year ago. This currency trend has made Japan’s imports more costly, although it has boosted the value of overseas earnings for major companies like Toyota Motor Corp.
Imports of oil and natural gas rose by over 23 percent in April compared to the previous year, while imports of food and manufacturing inputs also increased. The weakening yen can be linked to Japan’s low interest rates, with the central bank’s benchmark rate hovering just above zero as a measure to support the country’s sluggish economy and encourage lending.
In contrast, the U.S. has raised interest rates in an attempt to control inflation. The resulting higher returns on dollar investments have pushed the dollar’s value up against other currencies.
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