Japan records a trade deficit of 2.81 trillion yen — Asharq Al-Awsat

Japan's trade deficit for the first half of the fiscal year, from April to September, amounted to 2.81 trillion yen, or $17.8 billion. Preliminary data from the country's Finance Ministry indicate that the figure was driven by a sharp rise in the cost of imported oil due to the war in Iran, Asharq Al-Awsat reports.

Record trade volumes

Japan's exports in April–September rose by 18.4% year-on-year to 63.5 trillion yen. At the same time, imports increased by 20.4% to 66.3 trillion yen. Both figures were record highs for the country.

Japan, which depends almost entirely on oil imports, relied on access to the Strait of Hormuz for its supplies. According to the outlet, this route is effectively blocked, forcing the country to pay more to transport oil via other routes. Higher oil prices are also affecting the prices of plastic products and the cost of maritime shipping.

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September deficit and the yen exchange rate

In September, Japan's foreign trade deficit amounted to 536.6 billion yen. This was the fifth consecutive month with a deficit, although the figure decreased compared with 1.1 trillion yen in August. Imports in September rose by 18.9% year-on-year, while exports increased by 16.7%.

The international benchmark Brent crude price, according to the cited data, rose from about $70 per barrel in February to around $100 recently, after jumping above $110 per barrel during the previous months. Analysts believe that no rapid easing of prices should be expected.

Measures by the Bank of Japan and the government

A weaker yen further raises the cost of imports: the US dollar is trading at around 150 yen. Last month, the Bank of Japan raised its benchmark rate from 1% to 1.25%, its highest level in 31 years. The government of Prime Minister Sanae Takaichi is also proposing to reduce the food tax from 8% to 1%; parliament is considering the bill.