The trade surplus shrank 31.8 percent in April to 646.2 billion yen for the 16th straight month of decline as soaring oil prices inflated the value of imports, the Finance Ministry said in a preliminary report Thursday.
Exports rose 11.2 percent on year to 6.12 trillion yen while imports climbed 20.2 percent to 5.48 trillion yen, underscoring brisk trade with other Asian economies and the United States, the ministry said in the report.
Imports of crude oil jumped 65.6 percent in value due to record-high oil prices of $61.2 per barrel in April on a customs-cleared basis, or 25.9 percent higher than year-earlier levels.
Imports of nonferrous metals surged 44.1 percent, but aircraft imports — mainly from the United States — dipped 73.6 percent. Exports of automobiles and electronics parts rose 16.6 percent and 10.9 percent, respectively.
Economists project that rising imports propelled by high oil prices and firm domestic demand will continue to cut into the trade surplus in the coming months, but that the projected growth in exports, especially to the United States and China, is likely to cushion such effects.
“We expect the current trend (in the trade balance) to continue unless the yen sharply appreciates against the dollar in the near term, which, however, we believe is unlikely,” said Mamoru Yamazaki, senior economist at HSBC Securities (Japan) Ltd.
A stronger yen makes Japanese exports more expensive in dollar terms. Exporters’ profits also suffer when the yen strengthens because it cuts overseas revenues when they are converted back into the Japanese currency.
Yamazaki said that although financial markets have begun focusing on current account imbalances between the United States and Asia, most notably China, there are considerable interest rate differentials between the United States and Japan, which would make a sharp yen appreciation inconceivable.