TOKYO: Japan’s exports slipped for a ninth straight month in August as the Sino-US tariff dispute hit demand from China and other Asian trading partners, heightening risks for the world’s third-largest economy.
The negative reading adds some pressure to the Bank of Japan to expand stimulus at its policy meeting on Thursday to prop up business sentiment and manufacturing activity, which have been hit by global economic
weakness.
Exports in August slumped 8.2 percent from a year earlier, Ministry of Finance data showed yesterday, dragged down by autos, car parts and semiconductor production equipment.
The fall was smaller than a 10.9 percent drop expected by economists but marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.
“It’s worrying that exports to Asia and especially China are falling,” said Atsushi Takeda, chief
economist at Itochu Economic Research Institute.
“There’s no doubt that the Chinese economy is slowing down as the impact of the third round of US tariffs is starting to be felt.”
Exports in volume terms, which strips away the exchange rate impact, fell 6.0 percent year-on-year in August, more than reversing July’s increase, which was the first in nine months.
Fears of a global slump have persisted in recent weeks as uncertainty over US trade policy clouds the outlook for growth in the United States and export-reliant economies such as Germany, Japan and China.
“The high growth rate of the US economy that was seen until now could come down,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“There’s a possibility exports to the United States will stagnate on the back of that.”
The nine-month slump in Japan’s exports follows revised data that showed the economy grew at a slower-than-expected pace in April-June as business spending was downgraded from initial estimates.
The latest data comes a day before BOJ policymakers on Thursday decide whether to expand an already massive stimulus program to shield the economy from a possible downturn and protect its growth drivers.
Increasing signs of slowing global demand have made Japanese central bankers less confident about an early pickup in global growth and more open to debating policy easing.
Though service-sector activity remains resilient in Japan, analysts are worried domestic consumption could take a hit after the government raises the sales tax to 10 percent next month.
“There are hopes exports will rebound as domestic demand is expected to drop to some extent
following the sales tax hike,” said Itochu’s Takeda.
Imports in August fell 12.0 percent from a year earlier, the figures showed, the sharpest drop since a 16.3 percent decline in October 2016, according to Refinitiv data.
Asian demand for cyclical tech products remained especially weak in August, he added, in a sign that a bounce in exports may not be imminent. – Reuters
