Japanese exports on the rise while trade deficit nearly doubles

Japanese exports are on the rise. According to the Ministry of Finance, exports rose 12.2% in July compared to the previous year.

The report revealed a promising increase in Japanese exports over the year, mainly thanks to a weak yen which improved the sales of cars and electronics to Europe and the U.S.

During the first quarter of 2013, the Japanese economy grew by a seasonally adjusted annual rate of 4.1%, following half a year of stagflation.

However, the Finance Ministry also reported a 20 percent rise in imports and a huge trade deficit of 1.02 trillion yen ($10.5 billion) – nearly more than double the figure last year.

The U.S dollar has been strengthening over the past months; this has been very good for Japanese exports. However, a strong dollar also makes imports more expensive.

This is a particular problem, as only two out of 50 nuclear plants in Japan are currently operating – due to safety checks following the country’s nuclear disaster in 2011 – Japan has had to import a great deal more gas and oil than usual.

In fact, the Fukushima disaster in March 2011 has been the cause of Japan’s 13  consecutive months of trade deficits – the longest trade-deficit spell in more than thirty years – which has had a negative impact on the Japanese economy.

The Executive Board of the IMF (International Monetary Fund) states that Japan needs to undergo fundamental reforms and plans to reduce the country’s debt mountain. 

Trade Statistics – promising Japanese exports

Value of Exports and Imports in Japan July 2013 

(Unit: millions of YEN, % )

July 2013 July 2012 Percent Change
Exports 5,962,031 5,312,211 12.2
Imports 6,985,990 5,840,761 19.6
Balance △ 1,023,959 △528,550 93.7

Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management in Tokyo, told Reuters:

“We expect exports to continue to recover. The details are encouraging because you can see that exports to Japan’s main markets are bouncing back.”

Japanese companies will suffer from the deficit and rising costs. Experts believe the country is not likely to see a trade surplus for the next couple of years.