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Japan runs current account deficit in October as economy continues to cool By Investing.com



© Reuters.

By Ambar Warrick

Investing.com– Japan ran a surprise current account deficit in October, data showed on Thursday, weighed down by sluggish exports, increasingly expensive imports and pressure from high inflation. to the economy of this country.

The country posted sales of 64 billion yen ($1=136.37 yen), compared with a surplus of 909 billion yen in the previous month.

The decline follows previous data showing the country recorded more in October, with an increase of more than 50% year over year as fuel imports continued to be expensive.

Deeply depreciating local currency is the biggest reason behind more expensive imports, depreciating currency is also the cause of rising domestic inflation. Headlines hit a 40-year high in October, with the trend predicted to continue in the near-term.

The yen has been one of the worst performing Asian currencies this year as a growing rift between local and US interest rates fueled massive selling. Although the coin has recovered some of the points lost in the last month, it is still trading down almost 20% on the year.

Japan is also on a downward trend this year as overseas demand for goods slows amid growing fears of a global recession in 2023.

Japan’s economy’s unexpected post-COVID boom has been countered by high inflation and worsening retail sentiment.

But Thursday’s data showed Japan’s third-quarter decline was revised to be slightly weaker than initially expected. The revision showed that Japan’s economy shrank 0.8% year-on-year in the third quarter, compared with the initial estimate of 1.1%.

The revision was largely driven by strength in the quarter, growing at the fastest pace in four years.

Energy shortages have spurred increased spending on Japan’s electricity grid, while ultra-low interest rates in the country make the property market attractive.

However, data on Thursday showed both and remains weak, potentially highlighting further near-term headwinds for the Japanese economy.

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