Japan’s terms of trade – the price of exports relative to the price of imports – worsened for nine consecutive quarters after the second quarter of 2020. National accounts showed import prices rose by 60.7% while export prices only rose by 27.7% during the same period. The reasons for this were two-fold. There was a rise in commodity prices due to both the recovery of the global economy from the Covid-19 pandemic, and the supply shock stemming from Russia’s invasion of Ukraine. The other reason was the depreciation of the yen that resulted from the United States and Europe pursuing monetary tightening policies while ... (full story)