Global economy takes toll on Japanese exports

Imports and Exports | | MIC Customs Solutions |

Japanese exports and imports have both fallen as the country struggles with global economic uncertainty.

New figures from Japan suggest the nation's economy has taken a hit due to global conditions and internal factors.

According to the Ministry of Finance, Japanese exports decreased by 1.2 per cent year-on-year in February, the third consecutive monthly fall and slightly above the 0.9 per cent dip predicted by economists in a Reuters poll.

Imports also fell by 6.7 per cent, the biggest decline since November 2016 and far above the predicted 5.8 per cent. As a result, Japan recorded a trade surplus for the first time since September 2018.

The Bank of Japan noted a weakness in exports last week and said the country is feeling the pressure from a global economic slowdown.

Other factors being blamed include the US/Chinese trade war and complications over Brexit, as well as a waning technology cycle reducing demand for Japanese products.

In particular, the figures show a 14 per cent fall in exports to South Korea - which is a major provider of semiconductors to the global tech supply chain - and a 60 per cent plunge in shipments of chip-making material to Korea.

There have also been declines in shipments of cars and steel, with many factories reducing output amid the economic uncertainty.

However, exports to China did increase by 5.5 per cent in February, while shipments to the US and Europe went up by two per cent and 2.5 per cent respectively.

There have been suggestions that the Bank of Japan may be forced to implement a stimulus package to prevent trade friction and some analysts have even said a recession cannot be ruled out.

At a news conference last week, though, Bank of Japan governor Haruhiko Kuroda did not give any indication of additional stimulus, despite his acknowledgement that the economy is facing challenges.

Chief economist at Norinchukin Research Institute Takeshi Minami told the Japan Times: "The domestic economy will face a severe situation ahead of October's consumption tax hike."