Japan’s trade deficit widened sharply to JPY 634.5 billion in July 2026 from JPY 156.3 billion a year earlier, though it came in below market expectations of JPY 680 billion. It marked a third consecutive monthly deficit and the largest shortfall since January, as import growth outpaced exports.
Imports surged 27.8% year-on-year to a record JPY 12,146.3 billion, accelerating from June’s 25.4% increase, beating forecasts of 26.5%, and posting the fastest pace of growth since November 2022. The jump in imports reflected robust domestic demand, supported by the government’s late-2025 stimulus package. Crude oil imports soared 53.5% as Japan diversified its energy purchases away from the Strait of Hormuz amid ongoing geopolitical tensions.
Exports rose a comparatively slower 23.2% to JPY 11,511.8 billion, the strongest gain since October 2022 and above the consensus estimate of 19.9%. Outbound shipments increased for the 11th consecutive month, underpinned by a weaker yen and solid global demand for AI-related semiconductors, even as supply chain risks persisted due to the conflict in the Middle East.
