Japan August exports fall 9.6 % in 11th straight month of decline

An international container pier at a port in Tokyo.
An international container pier at a port in Tokyo. PHOTO: AFP

TOKYO (REUTERS) - 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 on Wednesday (Sept21) that exports fell 9.6 per cent in the year to August, dragged down by shipments of cars and steel. The year-on-year fall was bigger than a 4.8 pe rcent drop expected by economists in a Reuters poll, following a 14.0 per cent 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 concludes its two-day policy meeting later on Wednesday.

With growth lacking strength and inflation undershooting the BOJ's 2 per cent goal, many analysts in a Reuters poll expect the central bank to ease further on Wednesday 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 per cent 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 per cent, led by South Korea-bound shipments of steel. It was the 12th straight month of falls.

US-bound exports fell 14.5 per cent, hurt by declines in car shipments, while exports to European Union fell 0.7 per cent.

Imports fell 17.3 per cent in the year to August, versus the median estimate for a 17.8 per cent annual decline, as the yen's gains and dip in oil prices lowered import costs.

The trade balance swung to a deficit of 18.7 billion yen (S$250.5 million), versus the median estimate for a 202.3 billion yen surplus. It was the first trade deficit in three months.

Japan's economy grew at an annualised rate of 0.7 per cent in April-June, slowing from the prior quarter's 2.1 per cent 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 per cent in the current quarter and 0.6 per cent in the final three months of this year.