Japan's trade deficit in goods hit an eight-year high in January, Kyodo News reported, citing government data showing that imports continued to rise due to rising energy costs and a weaker yen.

reported that Japan's goods trade deficit widened to 2.19 trillion yen ($19 billion) in January, the sixth straight month of deficit and the largest goods trade deficit since January 2014, according to a preliminary report released by the Ministry of Finance. Japan posted a goods trade deficit of 2.8 trillion yen in January 2014.

Japan's imports of goods trade rose 39.6 percent year on year to 8.52 trillion yen in January, the 12th consecutive month of year-on-year growth and the third consecutive month of record highs since comparable data became available in January 1979, the statistics showed. The

report attributed surging crude oil, coal and liquefied natural gas prices, as well as the yen's weakening against the dollar on the back of potential monetary tightening by the US Federal Reserve, to pushing up the value of imports.

In January, the value of Japan's goods trade rose 9.6 percent from a year earlier to 6.33 trillion yen, marking the 11th straight month of year-on-year growth. The increase was driven by higher unit prices for exports such as steel and diesel.

Auto exports slipped 1.0 percent from a year earlier. In contrast, growth in auto exports reached 17.6 percent in December. This reflects the impact of the epidemic on automobile exports due to the reduction in automobile production. Kazuma Kishkawa, an economist at Daiwa Research Institute, said the resurgence of the virus in Japan in January, driven by a highly contagious variant of the 'Omicron' strain, was a big reason for the weakness. "At auto parts factories in China, more workers who are thought to have had close contact with infected people have been suspended, which has forced some major automakers to cut production," Kishkawa said.

By country, Japan's exports to China fell 5.4 per cent to 1.17 trillion yen in January, the first decline in 19 months, mainly due to lower shipments of plastics and car engines. Imports from China rose 23.7 per cent to a record 2.13 trillion yen.
Exports to the United States rose 11.5 percent to 1.12 trillion yen in January, helped by booming shipments of chip-making equipment. Imports from the United States surged 33.4 percent to 781.89 billion yen on the back of higher imports of medical supplies and petroleum products.

As for the European Union, exports to the bloc rose 16.1 percent to 618.04 billion yen in January, while imports rose 26.2 percent to 870.69 billion yen. Japan's exports to Asian countries, including China, rose 6.3 per cent to 3.58 trillion yen; Imports totaled 4.18 trillion yen, up 29.1 percent.

Looking ahead, energy prices are likely to keep rising. But the impact on Japan's imports is likely to be modest, Mr. Kishkawa said. "Japan mainly buys crude from Arab producers and the impact of the situation in Ukraine on Dubai crude prices is less than that of Brent and WTI," Mr Kishkawa said. He added that Japan's increased purchases of COVID-19 vaccines would keep imports rising until around April, after which the trade deficit would gradually narrow.

All data is compiled on a customs clearance basis.

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