Japan’s trade deficit surged to a record of 3.5 trillion yen ($26 billion) in January, as exports slumped against the backdrop of a sluggish global economy and Chinese demand for automobiles and chip-making technology.
The trade deficit increased from 1.45 trillion yen in December to surpass 3 trillion yen for the first time in comparable statistics dating back to the late 1970s, according to the finance ministry on Thursday. Although smaller than expected by experts, the deficit still set a new all-time high.
Thursday’s trade report followed gross domestic product data that was worse than expected, highlighting the challenges the Bank of Japan faces in generating growth driven by private demand while also steadily holding inflation above 2%.
Exports expanded 3.5% year-over-year to a total of 6.55 trillion yen, with chip-making equipment being one of the biggest laggards, indicating a decline in demand from around the world’s technological industries. Cars, automobile components, and chip machinery all contributed to a 17.1% drop in the value of exports to China. The expansion of exports to the United States and Europe slowed to 10.2% and 9.5 %, respectively.
Meanwhile imports surged 17.8% to just over $10 trillion.