Japan’s goods trade deficit in the January to June period shrank 77.4 percent from a year earlier to ¥1.73 trillion ($13.9 billion), due partly to smaller imports on the back of declining crude oil prices, the government said Thursday.
The smaller deficit, which followed a record-high deficit of ¥7.63 trillion the previous year, is also attributed to increased vehicle exports to the United States and semiconductor parts to Asia as well as overall economic recovery and the yen’s depreciation.
During the first half of 2015, the value of exports increased 7.9 percent from a year earlier to ¥37.81 trillion, while imports dropped 7.4 percent to ¥39.53 trillion, the Finance Ministry said in a preliminary report.
A falling yen usually supports exports by making Japanese products cheaper abroad and boosts the value of overseas revenues in yen terms, while pushing up import prices. Japan heavily depends on imports for its energy needs.
Despite the weakening yen, sharply lower crude oil prices helped reduce Japan’s imports in value terms, after crude oil imports dived 42.5 percent in the six-month period as average oil prices plunged 47.9 percent from a year earlier to $57.7 per barrel.
In addition to crude oil prices, developments in overseas economies, especially in Asia, will be key influences on Japan’s trade balance, said Yuichiro Nagai, an economist at Barclays Securities Japan Ltd.
“External demand has shown weakness when compared with domestic demand,” Nagai said, adding that there may be a downside risk in demand in China and other parts of Asia for the next few months that could affect Japan’s exports.
By product, exports of automobiles increased 9.6 percent in the period in value terms, led by a 19.8 percent increase to the United States. But exports to China plunged 38.4 percent, reflecting an economic slowdown.
Shipments to the United States, whose economy has been on a recovery track, expanded 16.6 percent to ¥7.54 trillion, while imports from the world’s largest economy grew 12.1 percent to ¥4.13 trillion, bringing the trade surplus to ¥3.41 trillion.
Exports to China, another major Japanese trading partner, increased 2.2 percent to ¥6.47 trillion, while imports from the country rose 1.9 percent to ¥9.43 trillion.
Japan’s trade deficit with China expanded to a record high of ¥2.96 trillion for any six-month period since comparable data became available in 1979.
Shipments to the 28-member European Union expanded 5.1 percent to ¥3.89 trillion, and imports from the region fell 0.7 percent to ¥4.04 trillion, bringing the trade deficit to ¥154.8 billion.
In June alone, Japan’s exports increased the most in five months, boosted by growth in automobile and electronic parts. The goods trade deficit totaled ¥69.0 billion, marking the third straight month of red ink, as exports rose 9.5 percent from a year earlier and imports dropped 2.9 percent.
Export volumes were unchanged, signaling limited support for industrial production that has pressured economic growth.
Japan’s recovery stalled in the three months to June, with weakness that Bank of Japan Gov. Haruhiko Kuroda is betting won’t persist this quarter. Thursday’s data indicate that foreign trade dragged on growth, said Marcel Thieliant, an economist at Capital Economics.
“Export volumes have been struggling to rise despite the weak yen,” said Atsushi Takeda, an economist at Itochu Corp. “China will continue to pose a risk to Japan’s economy. Inventory adjustments in China don’t bode well for Japanese exports.”
The Bank of Japan last week lowered its growth forecast for the year through March 2016 to 1.7 percent from 2 percent. Kuroda said developments overseas affected Japan’s exports and weakness in the economy from April to June won’t continue into this quarter.
The figures were measured on a customs-cleared basis.
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