Japan's trade imbalance widens amid currency volatility


(MENAFN) In a recent report released by the Japanese Ministry of Finance, it was revealed that Japan's trade deficit expanded by approximately 8 percent in April compared to the same period last year. This uptick was primarily attributed to the weakening of the yen, which bolstered the value of imports, consequently offsetting the gains from increased exports.

The data showed that while total exports amounted to 8.98 trillion yen (approximately USD57 billion), total imports surged to 9.4 trillion yen (about USD60 billion), marking an 8 percent rise from the previous year. Consequently, the trade deficit for the month reached 462.5 billion yen (equivalent to USD3 billion).

One notable trend was the significant increase in shipments to Asia, the United States, and the Middle East, while exports to Europe remained stagnant. Notably, imports from the United States saw a substantial spike of nearly 30 percent compared to the previous year, driven largely by increased demand for automotive components and computer chips.

The resurgence in automotive production within Japan, following disruptions caused by the COVID-19 pandemic, contributed to the heightened demand for mechanical equipment, including auto parts. Furthermore, imports, particularly of oil and gas from the Middle East, experienced a notable uptick of 15 percent.

The report underscored the impact of currency fluctuations on Japan's trade dynamics, with the dollar strengthening against the yen. Over the past year, the dollar appreciated from 139 yen to 156 yen, at one point even reaching 160 yen. While this bolstered the value of profits from overseas operations for major Japanese companies like Toyota, it simultaneously rendered imports more expensive.

Despite the challenges posed by the weakening yen and increased import costs, Japan's export sector continued to show resilience, albeit with some sectors experiencing varying degrees of growth. As the global economic landscape evolves, Japan remains attentive to currency movements and their implications for trade dynamics.

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