Analysts had forecast an increase of more than 30%. Exports rose 37% year-on-year in July. The figures showed the world’s third largest economy logged a trade deficit of 635 billion yen ($5.8 billion), as imports surged nearly 45% to 7.24 trillion yen ($66 billion), driven largely by imports of oil, gas and coal.
Tokyo and some other regions remain in a state of emergency due to outbreaks spurred largely by the delta variant of COVID-19. The strong rise in imports suggests that consumer demand has remained relatively strong, said Marcel Thieliant of Capital Economics.
However, “the external trade data suggest that net exports may knock off around 0.3 percentage points from Q3 GDP growth," he said in an analysis. Overall exports to the U.S. rose 23% and shipments to Asia climbed 26%. But exports to China were weaker, rising almost 13%.
Japan's exports of machinery and other factory equipment will likely remain strong in coming months as regional economies emerge from recent waves of pandemic lockdowns, economists said. But auto manufacturers have had to slow production as they struggle with shortages of computer chips and other parts due to soaring demand for IT products.
The data showed exports of cars slipped 1.5% in August, while imports of oil and other fuels surged 21%.