TOKYO (REUTERS) - Japan ran its biggest single-month trade deficit in more than eight years in May as high commodity prices and declines in the yen swelled imports, clouding the country's economic outlook.
The growing trade deficit underscores the headwinds the world's third-largest economy faces from a slide in the yen and surging costs of fuel and raw materials, on which domestic manufacturers rely for production.
Imports soared 48.9 per cent in the year to May, Ministry of Finance data showed on Thursday (June 16), above a median market forecast for a 43.6 per cent gain in a Reuters poll.
This outpaced a 15.8 per cent year-on-year rise in exports in the same month, resulting in a 2.385 trillion yen (S$24.6 billion) trade deficit, the largest shortfall in a single month since January 2014.
May's deficit marked the 10th straight month of year-on-year shortfalls and was bigger than the 2.023 trillion yen gap expected in a Reuters poll.
By region, exports to China, Japan's largest trading partner, shrank 0.2 per cent in the 12 months to May on weaker shipments of machinery and transport equipment to the country.
Shipments bound for the United States, the world's largest economy, rose 13.6 per cent in May, thanks to stronger exports of machinery and mineral fuels.
Imports were pushed up strongly by larger shipments of oil from the United Arab Emirates and coal and liquefied natural gas from Australia, the data showed.
Although Japan's economy is expected to grow an annualised 4.1 per cent this quarter as the Covid-19 pandemic fades, a slide in the yen is threatening to hurt consumer sentiment as higher fuel and food costs inflict pain on households.
Nearly half of Japanese companies see a weak yen as bad for their business, a private survey showed this week, suggesting that the currency's declines are hurting business sentiment.
Higher US interest rates versus rock-bottom Japanese yields have been weighing on the yen, which hit a new 24-year low of 135.60 per US dollar early on Wednesday before erasing losses to trade up about 1.3 per cent against the greenback.
