Japan's trade deficit widens to USD 2.34 billion in May, imports surge 12.5% YoY
New Delhi, June 17
Japan witnessed a trade deficit of around USD 2.34 billion in May, which is its first deficit in four months, according to the government data released on Wednesday.
The deficit in May was 42.8 per cent lower compared with the same month last year.
As per the report, Japan's crude oil imports fell sharply, dropping more than 57 per cent in volume amid the ongoing Middle East conflict. Meanwhile, exports rose 17.0 per cent to 9.51 trillion yen on robust demand for semiconductor and other electronic parts as well as motor vehicles.
On the other hand, imports surged 12.5 per cent from a year earlier to 9.89 trillion yen, on purchases of communication devices, the Finance Ministry said in the report.
Due to the Middle East conflict that disrupted transportation through the Strait of Hormuz, Japan's imports of oil dived 57.3 per cent to 4.73 million kiloliters, the data showed.
Japan has increased its efforts to procure fuel from alternative sources, including the United States, since the U.S.-Israeli attacks on Iran that began on Feb. 28 led to the effective closure of the vital shipping lane.
Crude oil imports from the United States increased 24.0 per cent to 576,000 kiloliters.
Earlier this week, Bank of Japan (BOJ) raised its short-term policy rate to 1 per cent from 0.75 per cent, which is the highest since 1995. Policy Board approved the move by a 7-1 majority vote. The new guideline for money market operations will take effect from Wednesday.
The interest rate applied to the complementary deposit facility, paid on current account balances held by financial institutions excluding required reserves, was increased to 1.0 per cent. On the other hand, the basic loan rate under the complementary lending facility was kept at 1.25 per cent.
Additionally, the basic discount rate was kept at 1.25 per cent, while bill discounting remains suspended. According to the Bank of Japan (BOJ), the rate decision reflects its assessment that Japan's economy has continued to recover moderately, despite some weakness caused by the situation in the Middle East.
The central bank noted that higher crude oil prices are putting pressure on economic activity. However, growth continues to be supported by strong corporate profits, along with improving employment and income conditions. The BOJ also said the risk of a sharp economic slowdown has eased, helped by government measures to reduce household energy costs and progress in securing alternative sources of raw materials.
— ANI
Reader Comments
The BOJ raising rates to 1% after decades of near-zero is a big deal. Inflation is finally forcing their hand. But with imports surging 12.5%, this might hurt domestic consumption more than expected.
Japan's semiconductor exports are booming! That's a silver lining. With global chip demand rising, India's own electronics manufacturing push could learn from their strategy. But the oil price shock is a reminder of how fragile our energy security is. 🇯🇵🇮🇳
Respect to Japan for managing this crisis without panic. The 57% drop in oil imports from the Middle East is massive but they've adapted. Meanwhile, some Indian states still struggle with fuel supply chains during normal times. We need that level of efficiency.
A 1% rate hike might seem small to us in India where rates are way higher, but for Japan, this is historic. Their economy is so different from ours—low inflation for decades, aging population. This could signal a shift in global monetary policy trends.
The BOJ's decision to keep the basic loan rate unchanged while hiking the policy rate shows caution. Smart move. And the govt's energy cost subsidies at home are helping. India could use similar targeted relief for the poor hit by fuel price hikes. 🤔
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