TOKYO (AP) – Japan’s trade deficit surged to a record ¥7.6 trillion ($74.9 billion) in the first half of the year as exports failed to keep pace with surging imports, the Finance Ministry reported Thursday.
Japan’s bulging import bill was partly due to a jump in demand as businesses and consumers stepped up purchases ahead of an April 1 increase in the sales tax to eight percent from five percent.
Imports for the six months jumped 10 percent to ¥42.6 trillion ($420 billion) while exports rose 3.2 percent to 35.1 trillion yen ($346 billion), the preliminary data show.
Imports from China including industrial machinery, consumer products and food jumped 14 percent, leaving Japan with a 2.92 trillion deficit with China for the first half.
Japan maintained a surplus with the US in the first half of the year, at ¥2.8 trillion ($27.6 billion), as exports rose 4 percent while imports climbed 12 percent.
The deficit in June alone more than tripled from the year before to a higher-than-expected ¥822.2 billion ($8.1 billion). Imports surged 8.4 percent year-on-year to 6.76 trillion yen ($66.6 billion), while exports fell 2 percent to ¥5.94 trillion ($58.5 billion), the ministry said.
“While the trade deficit widened last month, it remains much smaller than before the sales tax hike. This suggests that net trade finally ceased to be a drag on GDP growth last quarter,” Capital Economics analyst Marcel Thieliant said in a commentary.
The trade deficit was 911 billion yen in May.
Higher imports of fuel and gas have pushed Japan’s trade balance into the red following the halting of all its nuclear reactors for safety checks after the 2011 disaster at the Fukushima Dai-Ichi nuclear plant. In January-June, imports of liquefied natural gas rose 12 percent while oil imports jumped five percent.
But overall, Japan’s economy is less and less export-driven thanks to the shift overseas of much of its manufacturing in search of lower costs and faster growing markets.
Exports have not received much impetus from the weakening of the yen in 2012-2013. Japan remains heavily dependent on its vehicle exports, which rose 60 percent from the year before in the first half of 2014.