Japan’s Exports Extend Declines as China Slowdown Bites

REUTERS

10:30 JST, September 20, 2023

TOKYO, Sept 20 (Reuters) – Japan’s exports fell in August for a second straight month, weighed by declines in China’s demand for steel and heavy oil and stoking fears of a downturn in the face of elevated interest rates.

Ministry of Finance (MOF) data showed on Wednesday exports fell 0.8% year-on-year in August, slower than economists’ median estimates of 1.7% decline and following a 0.3% drop in Japan’s overseas shipments. It was the second straight month of annual declines.

By destination, Japan’s shipments to China, its largest trading partner, fell 11% year-on-year in August, marking a third straight month of double-digit drops.

“The growth of the Chinese economy itself is weak, or at least that is what is being reflected,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Therefore … the double-digit decrease in exports suggests that the situation continues to be quite bad, and that the situation does not seem to have bottomed out.”

Exports to the United States rose 5.1% year-on-year in August, driven by shipments of cars, mining and construction machinery.

Japanese policymakers are counting on external demand to pick up the slack and offset weak consumer spending.

However, the trade data dashes hope for prospects for an export-led recovery.

Partly reflecting weak domestic demand, imports fell 17.8%, weighed by energy costs, whose base effects fade away.

As a results, the trade balance came to the deficit of 930 billion yen ($6.29 billion), marking two straight months in the red, the trade data showed.

($1 = 147.7900 yen)