Japan Trade Deficit Hits 2.81 Trillion Yen Amid Energy Crisis
Japan recorded a record trade deficit of 2.81 trillion yen as war in Iran blocked the Strait of Hormuz and spiked energy import costs.
The Government of Japan recorded a trade deficit of 2.81 trillion yen ($17.8 billion) for the first fiscal half from April to September, nearly doubling the deficit from the previous year. The shortfall resulted from soaring prices for oil and liquefied natural gas following a war in Iran that blocked the Strait of Hormuz, a route that previously handled over 90% of Japan's crude imports.
While exports grew 18.4% to 63.5 trillion yen, imports surged 20.4% to 66.3 trillion yen, with both figures reaching record highs. In response, the government approved legislation to diversify oil supplies and provide grants to importers to offset increased shipping costs. Japan also participated in an International Energy Agency-coordinated effort to release crude from strategic reserves.
To combat the weakening yen and inflation, the Bank of Japan raised the benchmark interest rate to 1.25%, a 31-year high. Additionally, the administration of Prime Minister Sanae Takaichi is debating a food tax cut to support low-income families affected by rising costs.
