Japan exports seen shrinking for 8th month in July

Reuters . Tokyo | Published: 00:00, Aug 17,2019

 
 

A labourer works in a container area at a port in Tokyo, Japan July 19, 2017. — Reuters photo

Japan’s exports likely fell for an eight straight month in July, a Reuters poll showed Friday, as a protracted US-China trade war and weak global demand hurt shipments from the world’s third-largest economy.
Adding to the growing challenge for policymakers, the nation’s core consumer inflation is also expected to stay at 2-year lows for the month, weighed down by softer prices of energy-related items, the poll showed.
Exports in July were forecast to have shrunk 2.2 per cent from a year earlier, which would extend a slump that began in December last year, but not as bad as a revised 6.6 per cent decline in June.
Many export-reliant economies such as Japan have been hit hard by the Sino-US tariff row, which has already upended supply chains and undermined global trade, investment and corporate earnings.
‘Weak external demand due to the global economic slowdown, notably China, and heating up of the US-China trade friction, pushed down exports,’ said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.
‘International commodity markets such as oil prices have weakened, which also weighed on imports...but we expect a demand rush ahead of a planned sales tax hike in October will help boost imports.’
The poll forecast that imports would slip 2.7 per cent from a year earlier, meaning the trade balance will turn to a deficit of 200 billion yen ($1.88 billion) from a revised surplus of 589.6 billion yen in June.
The Finance Ministry will publish trade data at 8:50 a.m. local time on August 19 (2350 GMT, August 18).
The poll also found the core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 0.6 per cent in July from a year earlier, the same pace of growth in June.
The reading would be the weakest since July 2017 when the index climbed 0.5 per cent.
The stubbornly low inflation and rising economic risks will keep the Bank of Japan under pressure to ease further. In July the BoJ held off on expanding stimulus but committed to doing so ‘without hesitation’ if a global slowdown jeopardises the country’s economic recovery.
‘Growth in energy prices such as gasoline, electricity and city gas slowed down and mobile charges likely declined, which would make growth in core CPI modest,’ said Yusuke Shimoda, senior economist at Japan Research Institute.
The Internal Affairs Ministry will release data on consumer prices at 8:30 am local time on August 23 (2330 GMT on August 22).
Japan’s economy expanded for a third straight quarter in April-June thanks to robust domestic demand but weak external demand and a planned sales tax hike in October cloud the outlook.

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