Japan has reported a trade deficit of 294.3 billion yen ($2 billion) in September, as its exports to key destinations like China experienced a decline. The Finance Ministry data released on Thursday also revealed that for the first half of the fiscal year (April to March), Japan’s trade deficit stood at 3.1 trillion yen ($21 billion) according to a preliminary report.
In September, Japan saw a 1.7% decrease in exports compared to the same month the previous year, marking the first decline in 10 months. On the other hand, imports increased by 2.1% from the previous year, boosted by a weak yen which inflated their value.
While the drop in exports was unexpected, it is unclear whether it reflects weaker demand in major economies or if it is the result of temporary disruptions such as a recent typhoon. Nonetheless, the long-term concern for export-reliant Japan remains the slowing global demand.
The value of the U.S. dollar against the Japanese yen has been around 149 yen recently, close to its level a year ago but up from about 120 yen two years ago. Rising energy prices and inflation have also contributed to an increase in import costs.
During the months from April to September, Japan’s exports saw a 6.6% rise to 53.55 trillion yen ($358 billion), driven by strong demand for computer chips. Concurrently, imports grew by 7% to 56.66 trillion yen ($379 billion) as Japanese businesses and consumers purchased more U.S. products.
In the first half of fiscal 2024, Japan recorded a trade surplus of nearly 4.3 trillion yen ($29 billion) with the United States, while facing a deficit of 3 trillion yen ($20 billion) with China.
The trade deficit situation reflects the intricate balance of Japan’s export-oriented economy and the challenges it faces amidst global economic fluctuations.