According to data released by the government on Thursday, Japan accumulated a trade deficit in April, signifying the 21st consecutive month of deficits. However, compared to a year ago, the deficit shrunk considerably as exports rebounded.
The Finance Ministry reported that Japan’s trade deficit reached 432.4 billion yen ($3.2 billion) in April, as exports rose 2.6% and imports fell 2.6%.
As social restrictions regarding the coronavirus pandemic loosened, vehicle shipments and the export of auto parts and electronics products recovered.
Compared to a year ago, when oil prices soared for a variety of factors, including the unpredictability of the Ukrainian conflict, imports decreased as skyrocketing energy costs moderated.
Almost all of Japan’s petroleum and natural gas are imported. The depressed yen also contributed to the rise in imports.
As exports improved, Japan’s trade imbalance fell to its lowest level in 21 months in April.
Due to these various factors, Japan’s trade deficit in April decreased to nearly 855 billion yen, roughly half of what it was a year earlier.
Although detrimental to imports, the feeble yen benefits exports by increasing the value of foreign earnings when converted to yen.
The dollar is currently valued at approximately 137 Japanese yen, up from approximately 134 yen a year ago.
In April, Japan recorded a trade surplus of 794.8 billion yen ($5.8 billion) with the United States, as exports to the U.S. increased by 10.5% while imports increased by just 1%.
Japan’s trade deficit with China amounted to 460.9 billion yen ($3.4 billion), as imports increased by nearly 15% while exports declined by 3%.
As a result of COVID-19 restrictions, China’s consumption has slowed, which has had a negative effect on exports.
Junichi Makino, chief economist at SMBC Nikko Securities, predicted that exports will recover in the coming months as demand increases in global economies, while the price of petroleum imports is unlikely to continue rising.
“There is ample room for improvement in the terms of trade,” he said.
Japan recorded annual trade deficits from 2011 to 2015, as imports of oil, gas, and coal increased following the March 11, 2011 earthquake-tsunami and nuclear disasters on its northeastern coast, which resulted in the country’s nuclear power facilities being shut down. Since then, only a few have been resumed. In recent years, the nation’s trade deficits have increased.
With the recent reopening of borders, however, the return of vacationers to Japan should bolster exports. Travel restrictions to Japan had been in place for months due to COVID-19 concerns. Currently, the sidewalks of Tokyo and other popular tourist destinations are packed with people.