Japan’s trade deficit narrowed to 634.58 billion yen ($4.01 billion) in July, the Ministry of Finance reported Thursday, undershooting expectations of a 680 billion yen shortfall. The deficit widened from a revised 409.9 billion yen in June, reflecting a persistent imbalance between import costs and export growth.
Exports surged 23.2% year-on-year, exceeding the 19.9% forecast and accelerating from June’s 19.3% increase. Shipments of specialty chemicals, consumer and industrial goods, electronics and automobiles drove the expansion, signaling resilient global demand for Japanese manufacturing.
Imports climbed 27.8% from a year earlier, outpacing the 26.5% estimate and June’s 25.4% gain. The rise was led by a 53.5% jump in mineral fuel imports, including an 87.8% surge in petroleum purchases. Analysts attributed the increase to elevated energy prices amid geopolitical tensions, including the U.S.-Iran conflict, as well as demand for raw materials tied to data center and AI infrastructure, such as semiconductors and wiring.
The trade data underscores Japan’s ongoing struggle with high import bills, particularly for energy, while benefiting from stronger external demand for its industrial and technology exports. The July figures follow a period of volatility in global commodity markets, with energy costs remaining a key driver of the country’s trade dynamics.
