Japan’s exports flat on weak demand
Print Edition
JAPAN’S annual export growth slowed to a crawl in September as shrinking sales to China hurt the volume of shipments, raising fears that weak overseas demand may have pushed the economy into recession.
Ministry of Finance data showed exports rose just 0.6 percent in September, against a 3.4 percent gain expected by economists in a Reuters poll.
That was the slowest growth since August last year, following the prior month’s 3.1 percent gain. The weak yen helped increase the value of exports, but volume fell 3.9 percent, the third straight month recording an annual decline.
Yesterday’s data was the first major indicator for September and is part of the calculation of third-quarter gross domestic product. A third-quarter contraction would put Japan into recession, following the second quarter’s negative GDP result, and could force policy-makers to offer further stimulus.
“Given this data, the economy probably contracted about an annualized 0.5 percent in July-September. External demand, capital spending and inventory investment were a likely drag, while consumption picked up,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
China’s slowdown and soft domestic demand hurt factory output and the broader economy, but the Bank of Japan saw the effects of China’s slowdown as limited for now, sticking to its rosy growth outlook.
Still, weak indicators will keep the central bank under pressure to ease policy again to hit its ambitious 2 percent inflation target next year.
Some analysts expect the BOJ to move at its October 30 monetary meeting, when it also issues long-term economic and price projections.
“Weak exports were within the BOJ’s expectations so this data alone could not be a trigger. But there’s no doubt that pressure will mount on the BOJ to act if weakness persists,” said Taro Saito, senior economist at NLI Research Institute.
Separate data by the BOJ, which captures trade movements in real terms by eliminating price effects, showed real exports rose 0.2 percent in July-September while real imports grew 2.6 percent. This suggests net exports weighed on third-quarter GDP, said Yuichiro Nagai, economist at Barclays Securities Japan.
China’s economic growth has dipped below 7 percent for the first time since the global financial crisis, despite a barrage of stimulus measures.
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