Japan’s export growth slows as China, global downturn risks loom
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Exports to China, Japan’s largest trading partner, posted 11 straight months of declines.
PHOTO: NAGOYA PORT AUTHORITY
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TOKYO – Japanese exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel, as weakening external demand takes its toll on the trade-reliant economy.
Exports rose 1.6 per cent in October from a year earlier, Ministry of Finance data showed on Thursday, faster than a 1.2 per cent increase expected by economists in a Reuters poll but slower than the 4.3 per cent rise in September.
Weak exports have complicated Japan’s efforts to spur economic growth with sluggish domestic demand also weighing on the post-pandemic recovery.
“With China’s economy crawling at the bottom and demand from the United States and Europe slowing, we need to wait until the middle of next year for exports to bottom out,” said Itochu Economic Research Institute chief economist Atsushi Takeda. “Until then, Japan would need to count on consumption and capital expenditure to pick up the slack.”
With the absence of growth drivers, some economists warn Japan could fall into a technical recession, defined as two straight quarters of contraction.
Japan’s economy weakened in July-September
By destination, exports to China, Japan’s largest trading partner, fell 4 per cent year-on-year in October, posting 11 straight months of declines.
Exports to the United States, Japan’s key ally, rose 8.4 per cent in the year to October, as demand for hybrid vehicles and mining and construction machinery helped drive the value of US-bound shipments to its largest on record.
Imports fell 12.5 per cent in the year to October, broadly in line with the median estimate for a 12.2 per cent decrease.
The trade balance came to a deficit of 662.5 billion yen (S$5.9 billion), versus the median estimate for a 735.7 billion yen deficit.
Separate data from the Cabinet Office showed Japan’s core machinery orders, regarded as a leading indicator of capital spending, rose 1.4 per cent in September from the previous month, faster than the 0.9 per cent growth expected.
In one positive sign for a domestic recovery, manufacturers surveyed by the Cabinet Office expect core orders to rise 0.5 per cent in October-December, after a 1.8 per cent drop in the previous quarter. REUTERS
