Japan posted record exports and imports in July, government data released Thursday showed, as strong chip and auto shipments pushed export growth to a fifth consecutive month of acceleration while soaring energy bills kept the country in a trade deficit for a third straight month.
Exports rose 23.2% from a year earlier to 11.51 trillion yen ($73 billion), comfortably beating the 19.9% expansion forecast by economists polled by Reuters. Auto shipments to the United States and other markets held firm, while semiconductors and other electronic devices continued to sell well. Japan’s exports have now grown for nearly a full year.
Imports told a different story. They surged 27.8% to a seasonally adjusted 12.15 trillion yen ($77 billion), driven higher by rising crude oil prices and a weak yen. Both figures were the highest by value for July since comparable records began in January 1979, the Finance Ministry noted in its preliminary report.
The gap left Japan with a trade deficit of 634.5 billion yen ($4 billion) for the month. Behind the numbers sits a familiar energy problem: Japan imports almost all of its oil, and the conflict involving Iran has pushed crude prices up sharply. Much of the country’s Middle Eastern supply once passed through the Strait of Hormuz, which is now effectively closed.
That has forced Tokyo to look elsewhere, including toward the United States, for energy imports. The chip-driven strength in Japan’s export mix echoes a wider regional pattern, seen also in South Korea’s AI-chip export boom earlier this year.
The weak yen cuts both ways. It inflates the cost of imported fuel and materials, yet it also makes Japanese cars and electronics cheaper abroad, a benefit reflected in the export figures. The U.S. dollar recently traded at about 158 yen, below the levels above 160 yen seen in July but still weaker than the 140 yen of a year earlier.
Japan’s central bank has stepped in to support the currency, though those efforts have produced little lasting effect. Analysts tie the yen’s persistent softness to deeper causes, including the gradual erosion of Japan’s economic weight on the global stage.
For Japanese exporters, the immediate task is holding onto momentum in chips and vehicles as long as overseas demand and the currency stay favorable, while officials continue searching for cheaper, more reliable energy sources to close the deficit.