Japan runs biggest trade deficit in history in August

Japan runs biggest trade deficit in history in August

Containers are seen at an industrial port in Yokohama.

Japan ran its biggest single month trade deficit in August, as imports surged on high fuel costs and a slump in the yen, exposing the economy's vulnerability to external price pressures.

The trade deficit highlights the fragile nature of Japan's economic recovery despite the high price tag firms are paying for imports that are exacerbated by the yen's slide to a 24 year low and rising prospects of a global slowdown.

Imports jumped 49.9% in the year to August due to the costs of crude oil, coal and liquefied natural gas LNG, and causing the trade deficit to grow to 2.8173 trillion yen $19.71 billion, the biggest shortfall on record.

The gain in imports was larger than a median market forecast for a 46.7% rise in a Reuters poll, and outstripped a 22.1% increase in exports in the same month, the Ministry of Finance data showed.

The yen's fall by nearly 20% over the past six months due to higher import costs.

Exports bound for China, Japan's biggest trading partner, grew 13.5% year-on-year on stronger shipments of motor vehicles such as hybrid cars to the country.

The United States increased 33.8% in August due to stronger motor vehicle and parts exports.

The data showed that oil imports from the United Arab Emirates and coal and LNG from Australia boosted overall imports.

Japan's economy grew for a third straight quarter in April-June, as the lifting of local COVID 19 restrictions boosted consumer and business spending.

However, analysts say that the country's recovery remains fragile as consumers and business activity face risks such as a global growth slowdown and a tighter monetary policy by many central banks around the world.