FX.co ★ Japan Trade Gap Narrows But Misses Surplus Forecast

Japan's trade balance experienced a significant improvement in July 2025, with the deficit narrowing to JPY 117.6 billion from JPY 628.3 billion in the same month of the previous year. Despite this progress, the figures fell short of market forecasts, which anticipated a JPY 196.2 billion surplus. Export activities saw a 2.6% year-on-year decline, marking the third straight month of decreases and the steepest drop since February 2021, surpassing expectations of a 2.1% dip. This downturn was primarily influenced by comprehensive U.S. tariffs that suppressed international demand. On the other hand, imports decreased by 7.5%, marking the fourth contraction in the current year. This decline was less severe than the predicted 10.4% fall and represented a reversal from a slightly revised 0.3% increase observed in June.