Oct

16

Japan’s Trade Deficit Touched Record Levels in August

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Japan ran up its biggest ever trade deficit in August this year as spiralling energy prices inflated the country’s import bill and exports declined.

Japan’s Minister of Finance revealed that the current trade deficit has worsened by 236 billion yen or $2.3 billion from last year on a balance of payment basis. It was the largest gap since 1985 when the shortfall had reached comparable figures.

The primary reason behind the soaring import bill was higher prices of crude oil which traded as much as 61% higher in August than a year ago. In fact in July this year, prices of crude had touched record heights of $147.27 a barrel. Since Japan gets almost all its supply of oil from foreign markets, it recorded a steep rise in the import bill. According to the Finance Ministry report, Japan’s imports rose by 20.2% from last year after reaching to a record level in July.

Japan’s economy is trade based and the greatest part of its income is derived from exports. Thus declining demand of Japanese products in foreign markets has had a restricting effect on its exports which inched higher by 0.9%. This is because a downturn in the US and European markets as well as a faltering Chinese economy has led to lower demand of Japanese goods.