TOKYO — For the fourth consecutive month, Japan is experiencing a trade deficit as a combination of a depreciating yen and soaring energy costs continue to elevate import expenses.
The Finance Ministry reported on Wednesday that the trade imbalance reached 461 billion yen (approximately $3 billion) for the month of October.
Despite facing challenges recently, Japan’s exports showed some recovery, increasing by 3.1% compared to the same month last year. A notable factor contributing to this rise was the growth in shipments related to semiconductor production equipment.
On the other hand, imports slightly rose by 0.4% compared to the previous year, which still outpaced exports, exacerbating the trade deficit.
An overshadowing uncertainty in the trade landscape has emerged following the reelection of Donald Trump as President of the United States, leading to concerns over potential increases in tariffs that could affect international trade dynamics.
Exports play a crucial role in driving growth for Japan, which is home to automobile giants like Toyota Motor Corp, despite many manufacturers relocating production and investments overseas.
Prime Minister Shigeru Ishiba has been actively engaging with leaders across Asia, Europe, and South America to strengthen economic, trade, and security relationships. Although he has yet to meet with Trump, Ishiba recently attended the Group of 20 summit in Brazil.
The depreciation of the yen, which often accompanies sluggish economic growth, raises additional concerns. The U.S. dollar has been trading at around 155 yen, a significant increase from the 140-yen mark observed last year.
Rising inflation combined with escalating energy prices is straining import costs, while a slowdown in global demand is adversely affecting export levels.
Analysts suggest that recent reductions in overseas demand may be linked to temporary factors such as a typhoon, while the decline in exports can be attributed to disruptions in auto production within Japan.
Regionally, exports to the rest of Asia have increased, notably to places like Singapore and Hong Kong, whereas exports to the U.S. have experienced a slight decline.