Sunday, July 3

Japan’s trade gap widens as import costs surge on supply pressures


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TOKYO — Japan’s exports logged a third

straight month of double-digit gains in April led by US

demand, but surging global commodity costs inflated the

country’s import bill to a record, adding to worries about the

rising cost of living.

Shoring up the prospects of a private demand-led recovery,

however, was a gauge of capital expenditure that posted its

first monthly gain in three months.

The mixed data on Thursday followed the yen’s falls to

two-decade lows beyond 131 to the dollar earlier in May,

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which stoked fears of worsening terms of trade and added

financial burdens for the resource-poor Japanese economy as

import costs soar.

A weak yen, once considered a boon to the export-led

economy, is now having less of an impact as shipments grow

smaller, given the ongoing shift by Japanese manufacturers to

offshore production.

Japan’s exports rose 12.5% ​​in April from a year earlier,

Ministry of Finance data showed, led by US-bound shipments of

cars and undershooting a 13.8% increase expected by economists

in a Reuters poll. It followed a 14.7% rise in March.

Imports rose 28.2% in the year to April, versus the median

estimate for a 35.0% increase, as a weaker yen helped boost

already surging global commodity prices.

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That resulted in a trade deficit of 839.2 billion yen

($6.54 billion), narrower than the median estimate for a 1.150

yen shortfall but posting a ninth straight month in the trillion yen

red.

Analysts have warned of the risks of prolonged cost-push

inflation to the fragile economy with external factors, not

domestic demand, pushing import bills higher.

Separate data showed on Thursday Japan’s core machinery

orders rose 7.1% in March from the previous month, versus a 3.7%

increase expected by economists in a Reuters poll.

The volatile data series, regarded as a leading gauge of

capital expenditure in the coming six to nine months, provided a

glimmer of hope for a domestic demand-led recovery.

Japan’s economy shrank for the first time in two quarters in

the January-March period as COVID-19 curbs hit the service

sector and surging commodity prices created new pressures.

($1 = 128.3600 yen)

(Reporting by Tetsushi Kajimoto and Daniel Leussink; Editing by

Sam Holmes)

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