Japan's July trade deficit soars despite higher exports

TOKYO, Aug. 18 (UPI) -- Japan's trade deficit in July soared to 1.02 trillion yen ($10.5 billion) year-on-year due largely to surging imports, the government reported Monday.

The July trade gap was nearly double the deficit of 5.28 trillion yen in the same month of last year.

The Finance Ministry reported on its website July imports jumped 19.6 percent year-on-year to 6.98 trillion yen.

The import figures more than offset July's exports, which rose an impressive 12.2 percent year-on-year 5.96 trillion yen.

The economic policies of Prime Minister Shinzo Abe, focused on pulling the country's export-dependent economy out its 15 years of chronic deflation, has helped bring down the value of the yen against the U.S. dollar, which helps exports. However, a weaker yen, which has been declining in the past six months, also has pushed up Japan's import costs, mostly to finance energy imports.

Analysts told the BBC the government is expected to continue with its aggressive policies despite the growing trade deficit.

"In the short term the government will focus on its weaker yen policy as its priorities are very clear," Junko Nishioka, economist with RBS Securities in Tokyo, told the BBC. "They want to revive growth in the Japanese economy and a weak yen is key to achieving that goal."