Japan’s trade deficit shrank to JPY 695.30 billion in August 2024, down from JPY 940.10 billion in the same month last year, as the country continued to see export growth. Despite the narrowing gap, the figure came in above market expectations of a JPY 1,380 billion shortfall, indicating persistent challenges for the economy.

Exports Show Slower-Than-Expected Growth

Exports rose by 5.6% year-on-year to JPY 8,441.88 billion, marking the ninth consecutive month of expansion. However, this growth was below market forecasts of a 10.0% rise, suggesting that global demand may be cooling. Key sectors contributing to the export increase included machinery, electronics, and automobiles, though the slower-than-expected pace hints at potential headwinds in the months to come.

Modest Import Growth Amid Weak Domestic Demand

On the other hand, imports grew by a modest 2.3% to JPY 9,137.18 billion, marking the weakest increase in five months. This figure also fell short of expectations, with analysts predicting a more significant 13.4% surge. The modest growth in imports, largely driven by energy and raw materials, reflects a decrease in commodity prices and weaker domestic demand.

Future Uncertainty in Japan’s External Trade

Overall, while Japan’s trade deficit has narrowed compared to the previous year, the results show that both exports and imports have underperformed against expectations. Economic analysts suggest that Japan’s external trade sector may face further uncertainties, as global demand fluctuates and energy prices remain volatile.