Mubasher: Japan posted a larger-than-expected trade gap in October amid heightened trade disputes and pressures to trim its surplus with the US.

The monthly trade balance for the world’s third largest economy plunged to a deficit of 449 billion Japanese yen (JPY) ($3.98 billion), marking the largest since July 2015, the Finance Ministry said on Monday.

This came more than nine times above an expected JPY 48 billion gap according to a Nikkei survey.

The widening deficit came on the back of a 20% jump in imports in October, fuelled by larger volumes of oil and liquefied natural gas (LNG).

It is worth noting that oil prices surged in early October, before the US re-instated sanctions against Iran, the Organization of Petroleum Exporting Countries’ (OPEC) third-largest producer.

This outpaced an 8.2% gain in Japanese exports led by demand for vehicles, semiconductor equipment and motors.
Japan’s politically sensitive trade surplus with the US shrank 11% from a year ago in October to JPY 573.4 billion, declining for the first time in four months, as the country imported more grains, LNG and crude oil from the US.

Meanwhile, exports to the US grew nearly 12% to JPY 1.43 trillion, with more shipments of automobiles, machinery, medical products and rubber.

In addition, China was Japan’s largest importer, with its exports to the world’s second largest economy rising 9% on year to JPY 1.48 trillion, while Chinese imports to Japan jumped 16% to JPY 1.9 trillion on local demand for apparel and communications equipment.