Japan's exports fall at slowest pace in 7 months as it ships more cars to US

TOKYO • Japan's exports fell last month at the slowest pace in seven months as US-bound vehicle shipments rose from lows brought about by the Covid-19 pandemic, indicating easing pressure on the world's third-largest economy.

Official data yesterday showed exports fell 4.9 per cent in September against the same month a year earlier, more than the 2.4 per cent economists forecast in a Reuters poll.

Still, the slower pace of decline followed six months of double-digit falls, including a 14.8 per cent drop in August.

A fall in exports of iron to Taiwan and ships to Panama left September marking the 22nd consecutive month of export decline, the longest run since the 23-month stretch through July 1987.

To help the economy through the coronavirus crisis, the government should compile a third extra budget for the current fiscal year, economists told Reuters last week.

The two earlier budgets helped fund US$2.2 trillion (S$3 trillion) in economic stimulus, such as cash payments to households and small business loans.

Indeed, Prime Minister Yoshihide Suga plans to order his government to compile another stimulus plan as early as next month, to support consumer sentiment at risk from a new wave of Covid-19 infection, local media reported.

Still, the slowing decline in exports adds to other signs of gradual economic recovery such as a pickup in factory output.

"Production has recovered substantially, but as that's mostly a rebound after sharp falls, the recovery pace will probably slow," likely after year-end, said chief economist Yuichi Kodama at Meiji Yasuda Research Institute.

Moreover, a recovery in exports would likely have limited impact on the size of any further stimulus package given that the focus is expected to be on helping firms suffering from weak domestic demand, Mr Kodama said.

By destination, shipments to the United States rose 0.7 per cent, the first increase in 14 months, driven by stronger demand for electrical power machinery as well as passenger cars, whose numbers jumped 18 per cent.

Exports to China, Japan's largest trading partner, rose 14 per cent, the sharpest rise since January 2018. Exports to Asia as a whole fell 2 per cent, their slowest pace of decline since February.

Imports shed 17.2 per cent versus the 21.4 per cent median estimate of economists polled by Reuters, resulting in a trade surplus of 675 billion yen (S$8.7 billion).

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 20, 2020, with the headline 'Japan's exports fall at slowest pace in 7 months as it ships more cars to US'. Subscribe