Eurozone crisis adds to Japan's trade deficit

Japan has logged a huge trade deficit. Official figures for July indicate that slowing growth in Asia and the eurozone's protracted debt crisis are taking a high toll on the country's export abilities. Japan's foreign trade in July showed a shortfall of 517.4 billion yen ($6.5 billion, 5.21 billion euros), official data indicated on Wednesday. It was the largest ever deficit for the month and almost twice the 275 billion yen that had been forecast by analysts. The figures also marked a drastic change from the previous month when Japan was still able to record a small surplus of 60.3 billion yen. The marked change in July was attributed to Europe's debt-stricken economies and lower growth rates in Asian nations, including China. "The recent trend in which weakness in China and Europe has been putting major downward pressure on Japan's trade is getting even more serious," said Global Market Research Strategist Takahiro Sekido. US the only ray of hope? The figures telling a tale of huge trade imbalances may prompt the Bank of Japan to take preemptive action to shore up the economy in which exports play a vital role. Shipments abroad dipped by 8.1 percent to 5.31 trillion yen, with the volume of electronic parts decreasing, but the volume of automobile exports rising. Exports to the 27-member European Union plunged by a staggering 25.1 percent year-on-year. Imports from the EU by contrast rose 10.6 percent, leaving Japan with a deficit of 95.2 billion yen with crisis-stricken European trade partners. Mizuho Securities research and Consulting Senior Economist Norio Miyagawa said Japan would take some time to reverse the situation, but added that an economic pick-up seen lately in the US offered some hope for a more balanced development in the months ahead.