Japan's exports fall on weaker US, China demand

TOKYO • Japan's exports fell last month, dashing expectations for an end to the two-year run of declines, largely due to weaker shipments bound for the United States and China and suggesting a slower pace of recovery for the world's third-largest economy.

The trade data is likely to be of some concern for policymakers counting on solid external demand to boost factory output and broader corporate activity to revive the economy.

Ministry of Finance data out yesterday showed exports fell 4.2 per cent last month from a year earlier, defying economists' median estimate of a 0.5 per cent increase in a Reuters poll.

It was the 24th straight month of decline, the longest stretch on record, and follows a 0.2 per cent drop in the previous month.

"Overall, exports won't return to pre-virus levels until the middle of next year," said Capital Economics Japan economist Tom Learmouth.

By destination, shipments to the US shrank for the first time in three months, losing 2.5 per cent, as weak demand for aircraft equipment helped offset higher car exports.

Exports to China, Japan's largest trading partner, rose at the slowest pace in five months, growing 3.8 per cent, driven by communication devices.

Shipments to Asia as a whole fell back into contraction for the first time in two months, losing 4.3 per cent, while those to the European Union dropped 2.6 per cent last month.

Imports shed 11.1 per cent in November compared with the same month a year earlier, versus the median estimate for a 10.5 per cent decrease, bringing a trade surplus of 366.8 billion yen (S$4.7 billion), versus the median estimate for a 529.8 billion yen surplus.

Japan's Cabinet on Tuesday approved a third supplementary budget to fund a fresh US$708 billion (S$941 billion) stimulus package, which includes about 40 trillion yen in direct fiscal spending and focuses on investment in new growth areas such as green and digital innovation.

Data last week confirmed that the economy rebounded sharply in the third quarter from its biggest postwar slump in April-June.

REUTERS