"The weakening of the currency will benefit the economy as it will help companies in the auto and information technology sectors"
- Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management
Japanese officials unveiled the country's trade balance's figures, showing the deficit almost doubled from a year, as significant depreciation in Yen boosted import cost, the Ministry of Finance said Monday. After a huge contraction in deficit in June, the Japanese trade deficit soared to 1024.0 billion Yen in July, following a 180.8 billion Yen a month earlier, and strongly outpacing analysts' expectations of a 773.5 billion. This is the third largest deficit since 1979, and the reason for such deterioration was caused by a 19.6% jump in import costs, while export receipts rose 12.2%, the most since 2010. The country is definitely benefitting from a recovery in Europe and the U.S., pushing demand for Japanese goods higher. Figures also showed that shipments to the European Union rocketed 16.6%, almost double June's increase, boosted by product including cars, machinery and steel, while exports to the U.S. climbed 18.4%, up from a 14.6% rise recorded in June.
The Japanese Yen tumbled almost 25% against the greenback since November 2012, as Japanese policymakers unveiled a set of measures designed to boost growth and end decades of deflation. So far the government measures have shown early signs of success, however, the further development of economy will be the key to Abe's decision on whether to raise a sales tax to 8% from current 5%.
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