Japan’s trade deficit unexpectedly widened to 406.9 billion yen in June, weighed down by both yen depreciation and rising oil prices.

(1) According to Japan's Ministry of Finance, Japan's unadjusted trade deficit in June expanded from May's revised 391.8 billion yen to 406.9 billion yen (approximately 2.5 billion USD), significantly higher than analysts' expectation of 120 billion yen.(2) The main reasons for the unexpected widening of the deficit include the continued weakening of the yen, which pushed up import costs, as well as the Iran conflict driving up international oil prices, further increasing the import bill.(3) Specifically, imports in June rose by 25.4% year-on-year, while exports increased by 19.3% year-on-year. The import growth rate was significantly higher than that of exports, leading to a deterioration in the trade balance.