Japan’s trade deficit exceeded 1 trillion yen for the first time since January, reaching 1.1 trillion yen ($7.1 billion).
As the Iran war dragged on, crude oil prices remained high, pushing up Japan’s energy import costs. According to the International Energy Agency, Japan meets more than 87% of its energy needs with imports.
Oil imports increased by 58.7% in value terms. Most notably, oil imports from the United States jumped 1,026% year-on-year.
Marcel Therian, head of Asia-Pacific at Capital Economics, said in a note after the data was released that this may be because Japan is replacing oil imports from the Middle East with U.S. supplies, but it is paying a premium to do so.
He noted that Japan’s average crude oil import price in August was $103 per barrel, higher than the average Brent crude oil import price of $94 per barrel in August.
“Japan has replaced crude oil imports from the Middle East with imports from the United States in recent months, and the average price of crude oil last month was $110 (per barrel),” he added.
As a result, Japan still pays a premium to ensure sufficient oil supplies from sources outside the Middle East, but the government’s price limits on refined oil products mean that most of this cost is borne by the government rather than households and businesses.
Export growth in August was stronger than expected but slowed for the first time since February.
Shipments from Japan in August rose 19.3% from the same month last year, compared to economists polled by Reuters who had expected an 18.2% increase. Exports of semiconductor equipment increased by 52.3% in value terms, accelerating from the previous month’s 49.2% increase.
In terms of destinations, shipments to mainland China, Japan’s largest trading partner, increased by 20.6%, while exports to the United States increased by 24.9%.
Imports grew faster than expected in August, increasing by 28% compared to the 26.3% expected in a Reuters poll.
The Bank of Japan is widely expected to meet later this week and raise interest rates as domestic inflation rises.
— This is the latest news. Please check the latest information.
