Japan’s annual export growth slowed to a crawl last month as shrinking sales to China hurt the volume of shipments, raising fears that weak overseas demand might have pushed the economy into recession.
Data released yesterday by the Japanese Ministry of Finance showed exports rose just 0.6 percent from last year to ¥6.42 trillion (US$53 billion), while imports fell 11 percent, to ¥6.53 trillion. The weak yen helped increase the value of exports, but volume fell 3.9 percent, the third straight month recording an annual decline.
The ministry data showed China-bound exports fell 3.5 percent year-on-year to ¥1.11 trillion last month, down for a second straight month on falling shipments of light oil and car parts.
Photo: Reuters
Exports to the US, a major buyer of Japanese products, rose 10.4 percent to ¥1.28 trillion last month, led by shipments of cars. However, in volume terms, US-bound exports fell 4.7 percent.
Shipments to Asia — which account for about a half of Japan’s overall exports — fell 0.9 percent last month, the first annual decline in seven months, data showed.
The data was the first major indicator for last month and is part of the calculation of third-quarter GDP. A third-quarter contraction would put Japan into recession, following the second quarter’s negative GDP result, and could force policymakers to offer further stimulus.
“Given this data, the economy probably contracted about an annualized 0.5 percent in July- September. External demand, capital spending and inventory investment were a likely drag, while consumption picked up,” SMBC Nikko Securities Inc senior economist Koya Miyamae said.
China’s slowdown and soft domestic demand weighed on factory output and the broader economy, although the Bank of Japan (BOJ) saw the effects of China’s slowdown as limited for now, sticking to its rosy growth outlook.
Still, weak indicators are expected to keep the central bank under pressure to ease policy again to hit its ambitious 2 percent inflation target next year. Some analysts expect the BOJ to move at its monetary meeting on Friday next week, when it also issues long-term economic and price projections.
“Weak exports were within the BOJ’s expectations so this data alone could not be a trigger, but there’s no doubt that pressure will mount on the BOJ to act if weakness persists,” NLI Research Institute senior economist Taro Saito said.
Separate data by the BOJ, which captures trade movements in real terms by eliminating price effects, showed real exports rose 0.2 percent in July-September while real imports grew 2.6 percent. This suggests net exports weighed on third-quarter GDP, Barclays Securities Japan economist Yuichiro Nagai said.
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