Japan’s Trade Gap Widens as Import Costs Surge

Date: 20 May 2022 - 21:31

News ID: ۱۰۲۷۷۹

TOKYO (Reuters) - Japan’s exports extended double-digit gains for a third straight month in April, but surging global commodity costs inflated the country’s import bill to a record, adding to worries about the rising cost of living.
Shoring up the prospects of a private demand-led recovery, however, was a gauge of capital expenditure that posted its first monthly gain in three months.
The mixed data on Thursday followed the yen’s falls to two-decade-lows against the dollar earlier this month, which stoked fears of worsening terms of trade and added financial burdens for the resource-poor Japanese economy as import costs soar.
A weak yen, once considered a boon for the export-led economy, now has less of an impact as shipments grow smaller due to the ongoing shift by Japanese manufacturers to offshore production.
Japan’s exports rose 12.5 percent in April from a year earlier, Ministry of Finance data showed, led by US-bound shipments of cars, slightly missing a 13.8 percent increase expected by economists in a Reuters poll. It followed a 14.7 percent rise in March.
“Import gains caused by rising crude oil prices and a weak yen mean a transfer of national wealth to oil-producing nations, depriving Japan of purchasing power,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Imports rose 28.2 percent in the year to April, versus the median estimate for a 35.0 percent increase, as the weaker yen lifted already surging global commodity prices. Imports hit a record 8.9 trillion yen ($69.27 billion), topping exports worth 8 trillion yen.
That resulted in a trade deficit of 839.2 billion yen, narrower than the median estimate for a 1.150 trillion yen shortfall but posting a ninth straight month in the red.
Analysts have warned of risks of prolonged cost-push inflation to the fragile economy with external factors, not domestic demand, pushing import bills higher.
“If the zero-COVID policies are extended it will have a really harsh impact,” said Taro Saito, executive research fellow at NLI Research Institute.