Rising energy imports push Japanese trade deficit to record high

Imports and Exports | | MIC Customs Solutions |

Japan recorded its biggest single-month trade deficit in August, as high energy costs contributed to considerable growth in imports.

Soaring import costs, driven by high energy prices and a weak yen, led to Japan recording its biggest single-month trade deficit on record in August, official figures show.

Data from the Ministry of Finance revealed that the country's imports increased by 49.9 percent during the month, compared to a year earlier, as the cost of crude oil, coal and liquefied natural gas (LNG) all increased.

Exports, meanwhile, rose by 22.1 percent year on year, resulting in a trade deficit of more than 2.8 trillion yen ($19.7 billion).

The overall import figure was pushed up by LNG and coal coming from Australia and oil from the United Arab Emirates.

China remained Japan's biggest trading partner and exports bound for the country increased by 13.5 percent in value, compared to 12 months earlier. This was partly due to stronger sales of hybrid cars and other vehicles.

Takeshi Minami, chief economist at Norinchukin Research Institute, told Reuters: "Imports are on the rise as high raw material prices continued and supply disruptions eased, while exports are sluggish.

"Costs will rise if imports go up without any change to the size of the global economy. It will lead to the importing of inflation."

The Japanese economy has recently felt the effects of a weakening yen, with the currency losing nearly 20 percent of its value over the past six months.

Earlier this month, the yen dropped to its lowest point against the US dollar in 24 years, following a decline of up to 1.7 percent on currency markets.

While this drives up import costs, it could also have the effect of making Japan a more attractive destination to international tourists. It was recently reported that the government was considering lifting a cap on foreign visitor numbers to boost the Japanese economy.