Japan exports underwhelm in June as global weakness drags on economy
Sign up now: Get ST's newsletters delivered to your inbox
Exports were led by US-bound shipments of cars and mining machinery.
PHOTO: REUTERS
Follow topic:
TOKYO – Japan’s exports grew much-less than expected in June, highlighting weak Chinese and Western demand that continues to undercut the post-Covid recovery in the world’s third-biggest economy.
The risk of a world recession amid sweeping monetary policy tightening since 2022 has cast a pall over export-led economies, with many countries including Japan relying on domestic consumption to underpin growth.
The trade data, released on Thursday, showed exports rose 1.5 per cent year-on-year in June, below the 2.3 per cent gain expected by 15 economists in a Reuters poll, but faster than a 0.6 per cent rise in May.
Exports were led by US-bound shipments of cars and mining machinery, while China-bound shipments of steel, chips and nonferrous metal caused a double-digit decline in overall exports to China.
“The effects of US and European rate hikes aimed at curbing demand and inflation will persist from now on, while the Chinese economy is struggling despite some stimulus steps, all of which deprive the global economy of a growth engine,” said Mr Takeshi Minami, chief economist at Norinchukin Research Institute.
“Going forward, it could be hard for Japan to maintain a trade surplus in a stable manner unless exports regain strength and global commodity prices keep import costs low.”
Imports fell 12.9 per cent year-on-year in June, versus the median estimate for a 11.2 per cent decrease. The decline in the value of imports, caused by drops in crude, coal and liquefied natural gas, should help ease concerns about rising costs of purchases.
The overall trade numbers produced a trade surplus of 43 billion yen (S$408 million), confounding the median estimate for a 90.1 billion yen deficit.
A weak yen and surging import costs have led to nearly two years of trade deficits in Japan, another challenge for policymakers hoping to shore up a fragile recovery following the end of Covid-19 curbs.
By region, exports to China, Japan’s largest trading partner, fell 11 per cent year-on-year in June, due to drops in shipments of steel, chips and nonferrous metal, following a 3.4 per cent decline in May.
US-bound shipments, Japan’s major ally, rose 11.7 per cent year-on-year in June, led by shipments of cars, construction and mining machinery, following a 9.4 per cent rise in the previous month. REUTERS
