Japanese trade deficit higher than expected as imports jump

Japan recorded a wider-than-expected trade deficit for July as imports surged on the back of rising prices, according to data released by the Finance Ministry on Wednesday.

The trade balance for last month was -JPY622bn, compared with a surplus of JPY224bn in June and a deficit of JPY61bn in July 2023. The consensus forecast was for a JPY331bn.

Imports jumped by 16.6% year-on-year, accelerating sharply from the 3.2% annual growth registered the month before and ahead of the 14.9% expected.

This was the highest level of import growth since January 2023, with imports of mineral fuels, electrical machinery, chemicals, manufactured goods and food rising strongly.

Meanwhile, exports rose by 10.3%, up from 5.4% the month before but below the 11.4% expected by economists.