Japan Records Highest Ever Trade Volume Amid July Deficit

The Ministry of Finance of Japan reported that both imports and exports reached their highest values since records began in January 1979 during July. Despite this record volume, Japan recorded a trade deficit of 634.5 billion yen, marking the third consecutive month of losses.

Imports rose 27.8% to 12.15 trillion yen, driven by a 87.8% surge in the value of petroleum imports. This increase stems from high crude oil prices linked to the war in Iran and the closure of the Strait of Hormuz, which caused oil import volumes from the region to drop 32.8%.

Exports grew 23.2% to 11.51 trillion yen, the fastest growth since October 2022. This expansion was fueled by strong overseas demand for automobiles, electronic devices, and a 49.1% surge in semiconductor equipment shipments driven by the artificial intelligence boom. Shipments to China and the United States rose by 25.8% and 22%, respectively.

While the weak yen boosted earnings for major exporters like Toyota Motor Corp., it increased the cost of food and raw materials. The Bank of Japan intervened to support the currency with little lasting effect, and analysts noted that Prime Minister Sanae Takaichi's economic policies have had minimal impact. However, the strong export performance contributed to a 0.7% year-on-year GDP growth in the second quarter.