By Makiko Yamazaki
TOKYO, Aug 20 (Reuters) – Japan’s exports hit a monthly record in July, underscoring resilient global demand and offering support to an economy increasingly reliant on overseas shipments to counter weak domestic demand.
Total exports by value rose 23.2% year-on-year to a record 11.5 trillion yen ($72.62 billion) in July, data showed on Thursday, more than the median market forecast for a 19.9% increase and following a 19.3% rise in June.
The trade figures follow separate data this week showing Japan’s economy expanded for a third consecutive quarter in April-June, with strong exports helping to offset weak private consumption and business investment.
The resilience of Japan’s exports could support the case for the Bank of Japan to continue to normalise monetary policy, as the central bank is set to raise rates as soon as September.
Exports to the United States in July rose 22% from a year earlier, while shipments to China were up 25.8%, the data showed.
Imports in July grew 27.8% from a year earlier, compared with market forecasts for a 26.5% increase.
As a result, Japan recorded a trade deficit of 634.5 billion yen in July, compared with a forecast for a deficit of 680 billion yen.
The war in the Middle East earlier this year disrupted shipping through the Strait of Hormuz and triggered a surge in crude oil, petrochemical and other commodity prices, raising Japan’s import bill because the country relies heavily on overseas energy supplies.
Although oil prices retreated in June after shipping routes were partially restored, the impact on import values typically appears with a lag because customs-based import prices reflect contracts agreed weeks earlier.
Higher commodity and energy costs have also fed through supply chains, allowing many Japanese manufacturers to continue passing on costs to overseas customers. As a result, export values have been supported by higher prices even as growth in export volumes remained subdued.
($1 = 158.3500 yen)
(Reporting by Makiko Yamazaki; Editing by Sam Holmes)
