Japan August trade deficit up to $9.6B

Japan Thursday reported a $9.62 billion trade deficit in August for the second straight month, blamed on slower exports to Europe and China. The August deficit was far higher than that of July's $6.53 billion. The country's export-reliant economy, the third largest in the world after the United States and China, has been hit by the European debt crisis and China's slowing economy. Japan's exports also have been affected by a stronger yen. The Japanese Finance Ministry said the August numbers, however, were 3 percent less than from the same month of last year, partly because lower oil prices helped shrink imports, Kyodo News reported. Analysts told The Wall Street Journal the August deficit was within economists' expectations. "The size of the deficit was within expectations, but it increased from the previous month and underlines the difficult economic environment overseas," Junko Nishioka, chief economist at RBS Securities Japan, told the Journal. Declining exports to China, Japan's largest trading partner, comes at a time when the two countries are locked in a worsening territorial dispute over islands in the East China Sea. The Journal said August exports to China were down 9.9 percent year-on-year and analysts were evaluating what impact the island dispute might have on trade ties as anti-Japanese demonstrations spread across China. Japan's August exports to Europe fell 22.9 percent, but those to the United States rose 10.3 percent.