Japan's trade deficit widened in July as imports grew faster than exports, while the country continued to shift its energy sourcing amid heightened risks around the Strait of Hormuz.
Japan recorded a trade deficit of 634.5 billion yen in July, up from 409.9 billion yen the previous month but narrower than the 680 billion yen market forecast, according to preliminary data from the Ministry of Finance released Thursday.
Exports rose 23.2% year over year to 11.5 trillion yen, accelerating from a 19.3% increase in June and exceeding the 19.9% consensus forecast tracked by Investing.com.
Imports climbed 27.8% to 12.1 trillion yen, picking up from a 25.4% increase in the previous month and beating the 26.5% forecast.
The export gains were led by electrical machinery, partly due to a surge in semiconductor exports. Machinery exports rose 18.4%, while transport equipment increased 20.7%, helped by a 19.5% rise in motor vehicle exports.
By destination, exports to Asia increased 24.5%, with shipments to China rising 25.8% and those to Taiwan jumping 43.5%.
Exports to the U.S. increased by 22%, while imports from the U.S. surged by 58%, pushing Japan's North American import bill up 56.3%.
Against that backdrop, Japan expected to source about 100% of its average monthly crude oil imports in July from areas that do not require transit through the Strait of Hormuz, Prime Minister Sanae Takaichi said earlier last month.
"Thanks to the efforts of all of those involved, it looks like we'll be able to fully source all of our crude oil from areas outside of the Strait of Hormuz, despite having relied on the strait for over 90% of our oil previously," she had said, as quoted by Bloomberg.
Energy supply uncertainty remains as a 60-day negotiating period under a U.S.-Iran memorandum of understanding expired Monday without a lasting peace agreement.
The talks had sought to address tensions over the Strait of Hormuz, Iran's nuclear program, and economic sanctions.
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