Japan posted a record 11.01 trillion yen ($73 billion) trade deficit in the first half of fiscal 2022 as imports surged on higher energy and raw material prices, magnified by the yen's decline against the U.S. dollar to its lowest level in decades, Finance Ministry data showed Thursday.
The red ink showed the vulnerability of the resource-scarce nation that relies heavily on imports. The weaker yen, once welcomed as a boon to exporters, a major driver of economic growth, has eroded national wealth.
The deficit was the biggest for any fiscal half-year period. Japan logged its previous record trade deficit of 8.76 trillion yen in the October-March period of fiscal 2013. Comparable data became available in 1979.
In the six months to September, imports jumped 44.5 percent to 60.58 trillion yen, outpacing exports that grew 19.6 percent to 49.58 trillion yen, both record totals, the preliminary ministry data showed.
Major Japanese exports included cars and semiconductors, while imports of crude oil, liquefied natural gas and coal saw marked growth.
"The effect of higher energy prices and the weaker yen was big," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.
"Exports have been benefiting from the yen's depreciation of late, which should boost gross domestic product. That said, national wealth has been shrinking, in a blow to the prime minister's push for redistribution," he added.
Japan has been running a trade deficit for the past 14 months, with Russia's war against Ukraine sending crude oil and other energy prices sharply higher.
In September alone, the deficit stood at 2.09 trillion yen, following a record 2.82 trillion yen in red ink a month earlier.
The yen's weakness, a byproduct of the Bank of Japan's monetary easing, has added to the country's woes by inflating import prices. For exporters, however, it means higher profits earned overseas in yen terms. The dollar has gained over 30 yen this year.
Prime Minister Fumio Kishida, who has called for a new version of capitalism with a focus on redistribution, has stressed the need to curb income outflows amid the weaker yen.
Kishida is counting on a recovery of inbound tourism that will make the benefits, rather than the demerits, of the weaker yen felt in Japan.
Japan in August saw its lowest surplus in the current account, which includes the balance of trade, with attention on whether the balance would swing to a deficit on a half-year basis.
In the April-September period, Japan had a trade surplus of 3.16 trillion yen with the United States, one of its major trading partners, helped by U.S.-bound shipments of cars and machinery. Exports grew 22.8 percent to a record 9.11 trillion yen and imports rose 32.1 percent to 5.95 trillion yen.
Japan's trade deficit with China widened to 2.84 trillion yen, roughly triple the figure a year earlier of 981.49 billion yen.
Both exports and imports hit record highs, but Japan's imports of clothes, smartphones and personal computers outpaced shipments from Japan. Imports jumped 25.1 percent to 12.55 trillion yen, compared with a 7.4 percent rise in exports to 9.71 trillion yen.
With the rest of Asia, Japan had a trade surplus of 1.30 trillion yen, while it posted a deficit of 876.55 billion yen with the European Union.
The outlook for export growth remains uncertain, economists say, amid monetary tightening in major economies.
"For exports, a weak yen in and of itself is a plus. There is a question mark over export growth because of recession concerns in the United States, where inflation is accelerating and (the Federal Reserve) is raising rates. And we have low-flying growth in China," Kodama added.
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