Japan’s exports fell in August for a 11th consecutive month due to the yen strength and sluggish overseas demand, in a sign that an export-reliant economy may struggle to accelerate in the current quarter.
Ministry of Finance (MoF) data showed yesterday that exports fell 9.6% in the year to August, dragged down by shipments of cars and steel.
The year-on-year fall was bigger than a 4.8% drop expected by economists in a Reuters poll, following a 14% decline in July.
The data underscored a dominant market view that any growth in the world’s third largest economy would be moderate in July-September, offering little solace to the Bank of Japan, which concluded its two-day policy meeting yesterday. With growth lacking strength and inflation undershooting the Bank of Japan’s 2% goal, many analysts in a Reuters poll expect the BoJ to ease further yesterday when it announces results of comprehensive review of its stimulus. “Exports lacked momentum, although they were not so weak as the headline figure suggested.
On average they were largely flat or on a gradual recovery,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. “Given the yen’s gains, however, exports would likely struggle to accelerate ahead,” he said.
The MoF data showed exports to China – Japan’s largest trading partner – fell 8.9% in the year to August, marking the sixth straight month of annual declines.
Shipments to Asia, which accounts for more than half of Japanese exports, fell 9.4%, led by South Korea-bound shipments of steel.
It was the 12th straight month of falls.
US-bound exports fell 14.5%, hurt by declines in car shipments, while exports to European Union fell 0.7%. Imports fell 17.3% in the year to August, versus the median estimate for a 17.8% annual decline, as the yen’s gains and dip in oil prices lowered import costs.
The trade balance swung to a deficit of ¥18.7bn ($183.91mn), versus the median estimate for a ¥202.3bn surplus.
It was the first trade deficit in three months.
Japan’s economy grew at an annualised rate of 0.7% in April-June, slowing from the prior quarter’s 2.1% growth, led by leap year effects, as exports and capital spending fell.
The Reuters poll of economists showed the economy was likely to expand an annualised 0.7% in the current quarter and 0.6% in the final three months of this year.