Japan’s Trade Balance Declines in July

Japan’s trade balance shrank more than expected in July due to persistent manufacturing disruptions affecting exports and surging imports driven by improving local demand.

The trade balance fell to a deficit of 621.8 billion yen (approximately $4.2 billion), a decline from the previous month’s surplus of 224 billion yen and worse than the expected deficit of 330.7 billion yen.

Exports grew by 10.3% year-on-year in July, although this was below expectations of 11.4% and represented an acceleration from the previous month’s 5.4% growth.

Japan’s export performance has faltered in recent months, notably impacted by safety scandals in the automotive sector, which is a significant portion of the country’s export economy.

In contrast, imports soared by 16.6% year-on-year in July, surpassing the anticipated growth of 14.9% and notably higher than the prior month’s 3.2% growth. This increase in imports suggests that local consumption is recovering, spurred by rising wages from earlier this year.