Japan Posts 9 Trillion Won Trade Deficit in First Half... Double Blow from Rising Oil Prices and Weaker Yen

Trade Deficit of 1.01 Trillion Yen from January to June

Strong Exports of Semiconductors, Electronics, and Automobiles

Increased Imports of Nonferrous Metals and Smartphones

Japan posted a trade deficit of approximately 900 billion yen (about 9 trillion won) in the first half of this year. The rise in international oil prices due to the Middle East war, coupled with the depreciation of the yen, created a double burden.

Satsuki Katayama, Japanese Minister of Finance, is attending the House of Councillors Budget Committee meeting held at the National Diet in Tokyo on April 7. Photo by Reuters Yonhap News

According to Kyodo News and Xinhua News Agency on July 22, Japan’s Ministry of Finance announced a preliminary estimate showing the country's trade deficit for the first half of the year (January to June) reached 1.01 trillion yen (about 9.17 trillion won).

Exports in the first half of the year amounted to 60.66 trillion yen, up 13.7% from the same period last year, driven by robust exports of semiconductors, electronic devices, and automobiles. Imports rose 10.7% to 61.67 trillion yen, affected by increased imports of nonferrous metals and smartphones.

During the same period, imports of crude oil from the Middle East fell by 26.4%, totaling only 47.31 million kiloliters. Disruptions in traffic through the Strait of Hormuz following the outbreak of war in the Middle East at the end of February prompted Japan to seek alternative suppliers. According to AP News, after the Middle East conflict began, Japan’s imports of U.S. crude oil surged nearly fivefold compared to the previous year.

Japan’s trade balance in June alone posted a deficit of 406.9 billion yen. This was a larger deficit than May’s 391.8 billion yen and a reversal from a surplus of 12.2 billion yen in the same month last year. The Ministry of Finance explained that this was due to an increase in imports driven by the weaker yen and the ongoing rise in oil prices. The yen-dollar exchange rate has increased from about 140 yen per dollar a year ago to around 163 yen recently, meaning the value of the yen has fallen and the exchange rate has surged.

International oil prices have also been on the rise. The price of Brent crude, the global benchmark, soared from about $60 per barrel earlier this year to as high as $114, and has recently been trading around the $90 mark. Recently, following a U.S. airstrike on Iran, Iran has retaliated by attacking U.S. military facilities in Bahrain, Kuwait, and Jordan, in addition to ongoing tanker attacks near the Strait of Hormuz.

This content was produced with the assistance of AI translation services.