Exports of Japanese cars helped fuel a massive 65% jump in Japan's trade surplus with the United States in July but it was not enough to stop Japan opening up a $538 million overall trade gap with the rest of the world. File Photo by Mori Keizo/UPI |
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Aug. 17 (UPI) -- Falling exports saw Japan open up a $538 million trade gap with the rest of the world in July, official figures out Thursday show, raising a question mark over whether the current red-hot pace of economic growth can be sustained.
A sharp drop off in shipments of semiconductor-related equipment pulled down total exports to $59.8 billion despite surging car exports and while Imports also fell 13.5% to $60.3 billion, they still outpaced exports by 0.9%, according to trade data released by the Finance Ministry.
The deficit reverses a trade surplus in June, the first in more than two years.
The year-on-year export numbers, which have been on the rise since February 2021, come three days after Japan reported unexpected second-quarter GDP growth of 6% and revised up first-quarter growth to 3.7%, largely due to booming exports.
"We should pay attention to how long this drastic recovery will continue, given factors such as the U.S. and EU's financial policies and the slowdown of their economies," Dai-ichi Life Research Institute economist Chisato Oshiba told Nikkei Asia.
"While recovery will continue, its pace will most likely calm down."
Exports to China took the biggest hit, down 13.4% -- the eighth month in a row they have fallen as growth in the world's second-largest economy cooled -- led by a near one-third drop in steel exports and a 16.8% decline in electronics components.
Goods traveling in the other direction fell by almost 14%, led by a 28.2% slump in imports of Chinese-manufactured electronic components.
Japan's trade balance with Asia as a whole, although remaining in the black, contracted by more than a third to $1.74 billion while a surge in imports of cars and aircraft equipment from the European Union widened its deficit with the 27-member country bloc to $144 million.
The surplus with the United States skyrocketed to $5.84 billion, up 65%, on surging exports of car and heavy electrical machinery that pushed Japanese exports to a monthly record of $12.35 billion.
A steady decline in the value of the yen against the U.S. dollar -- currently 144.9 -- has shown few indications of coming to an end despite slipping below levels at which the Bank of Japan has previously stepped in to prop up the currency.
Late last month, the central bank eased its grip on the yield curve in order to allow long-term Japanese Government Bond yields to jump above the 0.5% limit it has imposed, taking a step back from its low-interest rate rules.
The bank's July 27-28 policy meeting agreed to purchase 10-year government bonds at a fixed rate of 1% every business day, in principle, with the change aimed at deflecting the effects of keeping the cost of borrowing low while supporting yen strength.
