Japan’s May exports see first fall in 15 months
Print Edition
JAPAN’S exports in May suffered their first annual decline in 15 months as external demand remained soft despite a recovery in advance economies, suggesting a bumpy ride for the world’s third-largest economy.
Exports to Asia and the United States fell during the month, Ministry of Finance data released yesterday showed, which is likely to heighten concerns about Japan’s growth outlook at a time when consumption is being crimped by a national sales tax increase.
Exports fell 2.7 percent in the year to May, the data showed, compared with a 1.2 percent drop seen by economists and a 5.1 percent rise in April. On a seasonally adjusted basis, exports fell 1.2 percent in May from the prior month.
The data will be a worry for Bank of Japan Governor Haruhiko Kuroda who last week said the timing of export recovery might have been delayed.
The central bank is counting on export growth to help offset the impact of a sales tax hike to 8 percent in April, and sees shipments picking up as overseas economies recover.
But signs suggest external demand is slow to pick up.
“The mechanism where exports drive activity in the manufacturing sector is not working, so this can’t offset the impact from the sales tax hike,” said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co.
“The US economy is improving, so exports will eventually recover, but it will take time.”
In the year to May, exports to the US fell 2.8 percent, but those to China rose 0.4 percent.
Exports to Asia, which account for more than half of Japan’s total exports, fell 3.4 percent in May from a year earlier.
Japan’s economy picked up speed in the first quarter as consumers loaded up on goods ahead of the tax hike, but growth is expected to slump in the current quarter as the effects of the one-off consumption spike winds back. An extended period of weak shipments could hit the economy hard and could prompt the central bank into further easing measures.
Japan’s imports fell 3.6 percent in the year to May, versus an expected 1.7 percent rise, taking it to a trade deficit of 909 billion yen (US$8.9 billion), the ministry data showed.
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