Japanese exports slowed further last month, data showed yesterday, offering yet more evidence of global difficulties spurred by China’s stumbling economy.
The figures also highlight the challenge facing Japanese Prime Minister Shinzo Abe as he struggles to reignite growth and came a day after Standard & Poor’s cut Japan’s credit rating, saying the government had little chance of fixing underlying problems.
They will add to pressure on the Bank of Japan (BoJ) to add more stimulus, despite the bank’s upbeat assessment this week.
The Japanese Ministry of Finance yesterday said that exports rose 3.1 percent year-on-year to ¥5.88 billion (US$49 billion) thanks to a rise in “automobiles and ships.” That was slower than the previous month and included a 4.6 percent tumble in shipments to China.
“The weakness [in exports] is not only coming from China, but also from the US and Europe,” Sumitomo Mitsui Bank lead economist Junko Nishioka told reporters.
“I think the third-quarter net trade data should add a negative contribution to growth, and bring headwinds for Prime Minister Shinzo Abe and the Bank of Japan,” Nishikora said.
Exporters are not getting the boon they might be hoping for from the fall in the value of the yen, with weakness in China — a key driver of worldwide growth — and Europe the main concerns.
On Wednesday, Standard & Poor’s downgraded its sovereign credit rating on Japan, and took a swipe at the government.
“We believe that the government’s economic revival strategy — dubbed Abenomics — will not be able to reverse this deterioration in the next two to three years,” Standard & Poor’s said.
“Economic support for Japan’s sovereign creditworthiness has continued to weaken in the past three to four years,” the agency said, pointing to “slow decisionmaking among policy institutions” as a particular issue.
The Bank of Japan held fire on expanding its ¥80 trillion annual asset-buying program, saying the economy “has continued to recover moderately ... exports and production are affected by the slowdown in emerging economies.”
Nishioka said a widening of the stimulus program was unlikely until the end of the year or early next year, as Bank of Japan Governor Haruhiko Kuroda remains bullish about the economy.
“The BoJ may want to wait [to determine] how much China and emerging economies are going to affect Japan’s economy,” Kuroda said.
Japan is the developed world’s most indebted country, with debt more than two times the size of its economic output.
The value of imports also dropped, slipping 3.1 percent to ¥6.45 billion, which the ministry said was owing to lower global prices for crude oil and liquefied natural gas.
Research house Capital Economics forecast the fall would continue this month due to “the slump in crude oil prices in recent months and the renewed strengthening of the yen.”
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