Japan’s January exports plunge 8.4%, biggest slump in 2 years

Source: Xinhua | 2019-02-22

Japan’s exports posted their biggest decline in more than two years as China-bound shipments tumbled, fuelling concerns about slowing global demand as the business mood sours and orders for the country’s machinery goods fell sharply.

Ministry of Finance data released yesterday showed Japan’s exports fell 8.4 percent year on year in January, a bigger decline than the 5.5 percent fall expected by economists.

It was the sharpest annual decline since October 2016, and followed a revised 3.9 percent year-on-year drop last December.

The data came after a key gauge of Japanese capital spending showed overseas orders for machinery fell the most in more than a decade in December, and business sentiment soured to a two-year low, as trade friction and slowing Chinese growth bite.Japanese exports to China, Japan’s biggest trading partner, fell 17.4 percent year on year.

While the Lunar New Year holiday weighed on China-bound exports, analysts say there are more concerning drivers behind January’s decline. In contrast, exports to China rose 30 percent year on year in January 2018.

“You cannot solely blame it on Chinese New Year holidays as China’s slowdown becomes more evident, which is having ripple effects on Japanese shipments elsewhere such as Asia and Europe,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Japan cannot count on exports to drive growth this year,” he said.

US President Donald Trump said on Tuesday that trade talks with China in Washington this week were progressing well and suggested he was open to pushing back the deadline to complete negotiations, but provided few details.

Japan’s shipments to Asia, which account for more than half of overall exports, fell 13.1 percent in January, the trade data showed.

Japan’s exports to the European Union fell 2.5 percent in January year on year, down for the first time in four months.

US-bound exports rose 6.8 percent, led by shipments of cars, which helped push Japan’s trade surplus with the United States up 5.1 percent to 367.4 billion yen (US$3.32 billion), its first increase in seven months.

Japan’s imports from the United States rose 7.7 percent in the year to January, led by crude oil.

The increases in US-bound exports and Japan’s surplus with the country raise concerns among Japanese policymakers and auto exporters that Washington may impose hefty duties on its imports from trading partners, analysts say.

The US Commerce Department sent a report on Sunday to Trump that could unleash steep tariffs on imported cars and auto parts.

Imports of Japanese cars make up about two-thirds of Japan’s US$69 billion annual trade surplus with the United States.