According to government data released Wednesday, Japan’s trade deficit narrowed 34.4% year-on-year to 461.25 billion yen (approximately $3 billion) in October. Exports reached a historic high, driven by strong demand for semiconductor manufacturing equipment and pharmaceutical products.
Key Performance Indicators:
- Fourth consecutive month of trade deficit.
- Exports increased 3.1% year-on-year to 94.3 trillion yen, first growth in two months.
- Imports rose 0.4% year-on-year to 98.9 trillion yen, seventh consecutive monthly increase.
Export growth was primarily driven by semiconductor manufacturing equipment exports to China and pharmaceutical exports to the United States. Meanwhile, stable Chinese market demand for personal computers supported import growth.
Kazuma Kishikawa, economist at Daiwa Institute of Research, suggests Japan’s trade deficit situation may persist for some time.
According to Ministry of Finance data, the yen appreciated 2.0% against the dollar year-on-year in October. However, with the yen weakening again in November, Kishikawa expects its impact on imports to become apparent in the next couple of months. Yen weakness increases import costs but also enhances the value of overseas profits when converted to yen.
Regarding Trade with China:
- 43rd consecutive month of deficit.
- Deficit increased 15.8% to 781 billion yen.
- Exports to China rose 1.5% to 16.8 trillion yen.
- Imports from China increased 5.6% to 24.6 trillion yen.
U.S. Trade Status:
- Trade surplus of 799.3 billion yen, down 12.2% year-on-year.
- Exports to U.S. decreased 6.2% to 18.1 trillion yen.
- Imports from U.S. declined 0.7% to 10.1 trillion yen.
Other Major Trade Data:
- Trade surplus with Asia (including China) at 33.61 billion yen, ninth consecutive month of surplus.
- Ninth consecutive month of trade deficit with EU, amounting to 252.5 billion yen.
Experts analyze that while Chinese government stimulus measures might boost demand, a potential demand decline next year could lead to weaker exports to China.
