Japan's trade deficit in the first six months of 2024 more than halved from a year earlier to 3.23 trillion yen ($21 billion), as continued export growth helped to counter inflated import costs amid the yen's sharp decline, government data showed Thursday.
Exports increased 8.8 percent to 51.52 trillion yen, the third highest amount on record, as shipments of U.S.-bound cars and chip-related machinery to China were robust. Imports, meanwhile, rose 0.8 percent to 54.75 trillion yen.
In June, Japan's exports marked the seventh straight monthly increase, helping the nation post its first trade surplus in three months of 224.04 billion yen, the Finance Ministry said in a preliminary report.
The growth in auto exports came despite a safety data-related scandal in Japan that led shipments of some models to be suspended.
The increase likely supported the Japanese economy, which economists say rebounded in the April-June period from a sharp contraction in the preceding quarter.
The yen was sharply lower relative to both the U.S. dollar and the euro, a headache for importers and Japanese households amid a cost-of-living crisis.
"Excluding the United States, demand is especially weak in Europe after interest rate hikes. The auto scandal in Japan apparently affected auto shipments to the region, too," said Chisato Oshiba, an economist at Dai-ichi Life Research Institute.
"Given the yen's weakness, which benefits exporters but inflates import prices, Japan will likely be in the red as a trend," she added.
In the January-June period, Japan had a 3.90 trillion yen trade surplus with the United States and a 2.87 trillion yen deficit with China.
Exports to the United States increased 13.9 percent to 10.40 trillion yen, compared with imports from the country that rose 15.1 percent to 6.49 trillion yen, a record high.
China-bound exports grew 12.3 percent to 9.14 trillion yen but were outpaced by imports that totaled 12.01 trillion yen, up 1.9 percent.
Japan had a 1.41 trillion yen trade surplus with the rest of Asia, including China, though it reported a 687.24 billion yen deficit with the European Union.
Shipments to the 27-member bloc were up 0.2 percent at 4.94 trillion yen, while imports rose 2.7 percent to 5.62 trillion yen.
"In terms of gross domestic product in April to June, data will likely show exports grew in real terms, but we cannot be optimistic about the outlook for the July-September period as the United States is heading into a rate-cut cycle" as economic growth slows, she said.
The Cabinet Office is scheduled to release the GDP data in August.
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