Ja­pan’s ex­ports drop most since 2009 as sales to China fall

The Pak Banker - - BUSINESS -

Ja­pan's ex­ports fell for a fourth con­sec­u­tive month and dropped the most since 2009, un­der­scor­ing con­tin­ued weak­ness in an econ­omy that con­tracted in the fi­nal months of 2015.

Ex­ports to China, Ja­pan's largest trad­ing part­ner, were down al­most 18 per­cent, driv­ing an over­all de­cline of nearly 13 per­cent in the value of over­seas ship­ments in Jan­uary from a year ear­lier. Im­ports dropped 18 per­cent, leav­ing a 645.9 bil­lion yen ($5.7 bil­lion) trade deficit, the Min­istry of Fi­nance said on Thurs­day.

Fall­ing ex­ports com­pound poor sen­ti­ment in Ja­pan, where wage gains have stag­nated, con­sumer prices are barely ris­ing and house­holds are re­luc­tant to spend. This year stocks have plunged and the yen has gained more than 5 per­cent against the dol­lar amid con­cerns over China's slow­down and U.S. growth. This adds to wor­ries about the see­saw­ing na­ture of Ja­pan's econ­omy be­tween mod­est growth and con­trac­tion. "The en­vi­ron­ment for Ja­panese ex­ports is look­ing bad as Ja­panese com­pa­nies shift pro­duc­tion abroad, the global econ­omy slows and the yen strength­ens," said Ya­sunari Ueno, chief mar­ket econ­o­mist at Mizuho Se­cu­ri­ties Co. in Tokyo. "It's be­com­ing clear that that there is no driver to sup­port Ja­pan's econ­omy."

While ex­ports to China typ­i­cally ease in the weeks be­fore lu­nar new year hol­i­days, and the break came ear­lier this year, ship­ments to Ja­pan's neigh­bor have dropped for six straight months. Part of the weak­ness in the ex­port fig­ure is also be­cause Ja­panese com­pa­nies re­ceived lower prices for sales of steel and chem­i­cal prod­ucts amid the gen­eral down­turn in com­mod­ity and en­ergy mar­kets, said At­sushi Takeda, an econ­o­mist at Itochu Corp. in Tokyo

By vol­ume, ex­ports fell 9.1 per­cent in Jan­uary from a year ear­lier, the big­gest drop since Fe­bru­ary 2013, while im­port vol­umes de­clined 5.1 per­cent. The yen strength­ened 0.2 per­cent to 113.88 ver­sus the dol­lar at 11:03 a.m. in Tokyo while the Topix stock in­dex ad­vanced 2.2 per­cent, re­bound­ing from a de­cline on Wed­nes­day af­ter U.S. shares rose. Ear­lier this week, gross do­mes­tic prod­uct data showed the Ja­panese econ­omy shrank an an­nu­al­ized 1.4 per­cent in the three months ended Dec. 31. Af­ter that, No­mura Se­cu­ri­ties Co. cut its fore­cast for Ja­pan's fis­cal 2016 GDP to 1 per­cent from a pre­vi­ous pro­jec­tion of 1.4 per­cent. The firm sees a high chance that the Bank of Ja­pan will ex­pand mon­e­tary stim­u­lus at its March meet­ing if the mar­ket tur­moil con­tin­ues. Itochu's Takeda doesn't think it is likely that Ja­pan will fall into a re­ces­sion though he said "there are grow­ing down­side risks to the econ­omy." "Should gains in the yen and de­clines in stocks con­tinue, they may take a toll on cap­i­tal spend­ing, ex­ports and con­sump­tion," he said.

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