TOKYO — Japan logged a second straight monthly trade deficit in June, new government data released Wednesday confirmed, with skyrocketing global oil prices and persistent currency weakness combining to push the nation’s import bill sharply higher. The Ministry of Finance’s preliminary figures put the June deficit at 406.9 billion Japanese yen, equal to roughly $2.5 billion. This marks a sharp reversal from June 2023, when Japan recorded a 122 billion yen trade surplus.
While exports have maintained solid momentum, growing faster than many economists projected, import gains have outpaced them by a wide margin. Preliminary data shows exports climbed 19% year-over-year in June to hit 10.9 trillion yen, with strong demand for Japanese semiconductors leading the growth expansion. Exports increased across key trading partners, including both the United States and China, the nation’s two largest commercial markets. Imports, by contrast, rose 25% year-over-year to 11.3 trillion yen, outstripping export gains by six percentage points.
The sustained weakness of the Japanese yen against the U.S. dollar has amplified shifts in both import and export values. Most global energy and commodity shipments are priced in dollars, so a weaker yen raises the domestic cost of imported goods while making Japanese exports more price-competitive in global markets. Over the past 12 months, the yen has depreciated significantly, with the U.S. dollar trading around 163 yen in recent sessions, up from roughly 140 yen a year earlier.
Japan relies almost entirely on imported oil to meet its domestic energy demand, and prolonged geopolitical disruption has upended traditional supply chains for the commodity. For decades, the majority of Japan’s oil imports traveled through the Strait of Hormuz, a critical global chokepoint for energy shipping. Ongoing tensions in the region have severely disrupted vessel traffic through the strait, forcing Japanese importers to pivot to new supply sources. Wednesday’s data illustrates this shift: Japanese oil imports from the United States surged nearly 500% compared to June 2023 as importers seek alternative supplies.
Global crude oil prices have also swung dramatically since the start of the year. Brent crude, the global benchmark, traded around $60 per barrel in January, before spiking to a peak of $114 per barrel amid supply disruptions. While prices have pulled back from that high point, they have stabilized at much higher levels than seen at the start of 2024, with Brent recently trading around $90 per barrel.
Looking at the first half of the 2024 fiscal year as a whole, Japan’s cumulative trade picture also shows a deficit. Total exports from January to June rose nearly 14% year-over-year to 60.6 trillion yen, while total imports climbed nearly 11% to 61.9 trillion yen, resulting in an overall cumulative deficit of approximately 1 trillion yen for the half-year period.
The trade data comes as Japan’s first female prime minister, Sanae Takaichi, leads an administration pursuing aggressive economic stimulus policies designed to boost long-term growth, with targeted public spending on artificial intelligence, defense, and robotics sectors. However, recent public opinion polls indicate that the prime minister’s previously high approval ratings among Japanese voters have started to decline amid ongoing economic pressures.