The trade deficit shrank 76.5 percent in May from a year earlier to ¥216.0 billion as declining crude oil prices continued to push down imports, the government said Wednesday.
But the trade balance remained in the red for the second consecutive month, due partly to slower growth in exports, which rose 2.4 percent from a year earlier to ¥5.74 trillion, smaller than an 8.0 percent expansion the previous month.
The value of imports dropped 8.7 percent to ¥5.96 trillion, down for the fifth straight month, reflecting decreased energy-related imports including crude oil and liquefied natural gas.
In May, imports of crude oil plunged 31.7 percent for the 10th straight monthly decline, as average oil prices dropped 45.8 percent from a year earlier to $59.20 per barrel, the Finance Ministry said.
Despite the continued growth in the value of exports, which increased for the ninth consecutive month on the back of the yen’s depreciation, they decreased 3.8 percent on a volume basis, due in part to a decrease in automobile exports.
Vehicle exports to China and the European Union suffered a sharp decline. On a volume basis, automobile exports dropped 7.9 percent for the first decline in six months.
In addition to weakening demand for automobiles, exports of construction machines and mining machinery are also declining as resource-rich countries reduce capital spending because of lower commodity prices, said Hiroshi Watanabe, senior economist at SMBC Nikko Securities Inc.
“The trade balance is likely to remain in the red near the break-even level for a while,” Watanabe said, projecting exports of automobiles and construction machines to remain sluggish even if the U.S. economy continues to recover.
Imports are also likely to bottom out, prompted by recovery in personal consumption and capital investment in Japan, Watanabe added.
Shipments to the United States, whose economy has been on a recovery track, climbed 7.4 percent to ¥1.09 trillion for the ninth straight monthly increase, and imports from the world’s largest economy grew 11.5 percent to ¥682.4 billion.
Exports to China, another major destination for Japanese products, rose 1.1 percent to ¥1.06 trillion for the third consecutive monthly gain, while imports from the country went up 1.5 percent to ¥1.44 trillion.
Exports to the European Union, meanwhile, edged up 0.4 percent to ¥602.1 billion, and imports from the 28-nation bloc increased 1.1 percent to ¥661.1 billion.
The figures were measured on a customs-cleared basis.