Jakarta, CNBC Indonesia – Japan now a victim of the war between Russia and Ukraine. This country recorded its largest trade balance deficit in 2022.
This was triggered by soaring energy and raw material prices, which were exacerbated by the yen’s dramatic fall. A resource-starved nation, Japan relies heavily on imports of fossil fuels, the prices of which have soared sharply last year in large part because of Moscow’s attack on Kyiv.
In 2022 the value of imports is 19.97 trillion yen or the equivalent of IDR 2,355 trillion. This is higher than exports and is Japan’s biggest deficit.
Comparative data has been available since 1979. This figure also marks a jump from Japan’s previous record trade deficit of 12.82 trillion yen (Rp 1,511 trillion) in 2014.
A number of observers gave warning. Taro Saito, executive research fellow at the NLI Research Institute, said Japan will continue to run a large trade deficit in the near future.
“While exports are expected to slump on the back of a slowing overseas economy, import values will also diminish as the yen’s decline takes a breather,” he wrote in a report published after the data release, citing AFP.
“The trade deficit is expected to ease gradually while remaining at high levels.”
Japan itself has stopped importing Russian oil in reaction to the war in Ukraine, although it still buys coal and natural gas from that country. Meanwhile, LNG imports from Russia will increase by more than 4% in 2022.
The yen hit a decades-long low against the dollar last year, prompting government intervention to prop up the currency. Driven by the monetary policy gap between Japan and other countries, a weaker yen inflates profits for exporters but raises the price of imports such as energy.
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