The nation posted a goods trade deficit for the fifth straight month in August, the government said Thursday, partly reflecting a drop in exports to China amid a slowdown in the world’s second-largest economy.
The deficit in value terms shrank 40.2 percent from a year earlier to ¥569.7 billion as imports were pushed down by lower crude oil prices, the Finance Ministry said in a preliminary report.
Exports grew 3.1 percent to ¥5.88 trillion for the 12th straight monthly increase, due largely to the yen’s depreciation and increased vehicle exports to the United States. They decreased 4.2 percent on a volume basis.
Exports to China, a major destination for Japanese products, dropped 4.6 percent to ¥1.06 trillion for the first decline in six months, weighed down by lower exports of vehicle parts and smartphone components.
The decline in auto parts exports “may indicate that China’s car market is not doing very well,” a ministry official said.
Meanwhile, imports from the country surged 14.6 percent to ¥1,549.5 billion as imports of smartphones and personal computers grew.
Disappointing data in recent months has raised concern on the outlook for economic growth after a contraction last quarter and an inflation rate that has slid back to zero.
“Focus continues to be on how much growth will rebound from July to September,” said Koya Miyamae, an economist at SMBC Nikko Securities Inc. Miyamae, in a note before the data release, said a second consecutive drop in gross domestic product would make further stimulus from the government and Bank of Japan more likely.
The value of overall imports decreased 3.1 percent to ¥6,451.1 billion, down for the eighth consecutive month, as energy-related imports such as crude oil and liquefied natural gas from the Middle East continued to fall.
In August, imports of crude oil dropped 32.9 percent for the 13th straight monthly fall, as average oil prices shed 46.6 percent from a year earlier to $59.1 per barrel, the ministry said.
Shunsuke Kobayashi, an economist at Daiwa Institute of Research, said a trade deficit is likely to remain in place as imports are becoming bigger than exports amid weakening external demand, though lower oil prices have pushed down imports.
“The deficit is likely to widen in the latter half of this fiscal year,” Kobayashi said, adding that exports to the United States have been shrinking on a volume basis due to weakening corporate demand.
Shipments to the United States, Japan’s other major trading partner, climbed 11.1 percent to ¥1,135.8 billion for the 12th straight monthly gain, while imports from the world’s largest economy rose 5.4 percent to ¥672.2 billion.
Exports to the European Union, meanwhile, fell 0.2 percent to ¥595.0 billion and imports from the 28-nation bloc surged 21.8 percent to ¥768.5 billion, lifted by greater imports of medication for hepatitis, the official said.
As a result, Japan’s trade deficit with the EU grew fivefold to ¥173.5 billion, the largest since comparable data became available in 1979.
The figures are on a customs-cleared basis.
The export figures come on the heels of a cut to Japan’s long-term credit rating Wednesday by Standard & Poor’s, which said there was little chance of Prime Minister Shinzo Abe’s strategy turning around the poor outlook for economic growth and inflation over the next few years.