Exports fell for a fourth consecutive month and dropped the most since late 2009, underscoring continued weakness in an economy that contracted in the final months of 2015.
Exports to China, the nation’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 trade deficit, the Ministry of Finance said 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 there is no driver to support Japan’s economy.”
While exports to China typically ease in the weeks before the Lunar New Year holiday, 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.
Earlier this week, gross domestic product data showed the economy shrank an annualized 1.4 percent.
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 thinks it is unlikely Japan will fall into a recession, but 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.”