Japan’s trade deficit persists as the yen’s depreciation reduces purchasing power

Japan’s imports increased by more than half year on year in October. Exports increased 25.3% year on year in October, led by car and chip shipments. Imports increased by 53.5%, resulting in a trade deficit of 2.16 trillion yen ($15.50 billion). The trade deficit in September was 2.09 trillion yen.
Over the last few decades, the world’s third-largest economy has relied on exports of processed goods such as automobiles and electronics for growth. Given the sharp yen declines, policymakers are now more concerned about the impact of surging imports on its resource-poor economy. The trade deficit is exacerbating the pain felt by households struggling to make ends meet in the face of currency-driven price increases on imported goods, as well as by import-dependent businesses.
In October, Japan’s trade deficit reached a new high as imports outpaced exports for the first time in a year. Exports to the United States, Japan’s top trading partner, increased 36.5% year on year in October, led by automobiles and auto parts. The Chinese slowdown suggested that the country’s zero-COVID policies had weakened demand, affecting Japanese shipments and possibly the global economy.

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