Japan’s Trade Deficit Narrows in May

Japan’s trade deficit narrowed sharply in May from a year earlier because of lower costs for imported oil and gas, but exports also slowed as demand softened in China.

The Finance Ministry said Wednesday that the deficit in May was 216 billion yen ($1.7 billion), compared with 917.2 billion yen a year earlier but exceeding the 55.8 billion yen deficit in April.

Exports rose 2.4 percent to 5.74 trillion yen ($46.5 billion) while imports sank 8.7 percent to 6 trillion yen ($48.4 billion). Exports rose year-on-year at an average pace of 9 percent in January-April after rising at a 6.2 percent pace in the latter half of 2014.

Japan’s exports to the U.S., its biggest overseas market, rose 7.4 percent in May to 1.09 trillion yen ($8.8 billion). Imports climbed 11.5 percent. Exports to China rose 1.1 percent, while imports from China were up 1.5 percent from a year earlier.

The plunge in the price of crude oil over the past year has gradually reduced costs for imports of oil and gas, though that effect has likely run its course now that benchmark Brent crude is holding steady at over $60 a barrel, Marcel Thieliant of Capital Economics said in a commentary Tuesday.

Japan’s imports of oil, gas and coal fell 33 percent in May from a year earlier.

With the Japanese yen expected to weaken further against the dollar, costs for imports are likely to rise. The dollar was trading at about 123.4 yen on Wednesday after strengthening to about 125 yen earlier this month.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza