Japan’s imports climbed to their largest value on record in September as a weakened yen exacerbated rising fuel and food costs.
Imports rose by 45.9% to 11 trillion yen ($73 billion), the fifth month in a row that they’ve climbed by more than 40%, hitting their highest ever level, according to Ministry of Finance data going back to 1979.
They outstripped exports, which rose by 28.9% in September, taking Japan’s trade deficit to 2 trillion yen ($13.3 billion).
Persistent deficits, though, worsen Japan’s terms of trade by causing a shift of domestic income overseas and undermining Japanese purchasing power.
The yen hit 150 against the dollar on Thursday, its weakest level since 1990.
Once welcomed for making exports more competitive, the yen’s weakness is now seen hurting households and retailers by inflating already high prices of imported fuel and food. The currency’s sharp falls also heighten uncertainty for firms making business decisions.
“Surging imports are by no means a reflection of strength in domestic demand. Instead, higher living costs will prompt households to tighten their belts,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“The weak yen may be inflating export value but external demand is slowing down. I would not be surprised if Japan would follow Europe and the United States in sliding into recession next year when the global tightening cycle runs its course.”
Lower Export Growth
Japan’s comparatively lower export growth was driven by US-bound shipments of cars and demand for chip and electronics parts from South Korea.
By region, exports to China, Japan’s largest trading partner, grew 17.1% year-on-year in September, led by demand for cars and chip-making equipment.
US-bound shipments advanced 45.2% in the year to September, led by shipments of cars, construction and mining machinery.
Japan’s economy expanded at an annualised 3.5% in April-June, posting a third straight quarter of growth, as the lifting of Covid-19 curbs boosted consumer and business spending.
- Reuters, with additional editing from Alfie Habershon