Exports fell for the seventh consecutive month in April as the yen strengthened, underscoring the growing challenges to Prime Minister Shinzo Abe’s efforts to revive economic growth.
Overseas shipments declined 10.1 percent in April from a year earlier, the Finance Ministry said Monday. The median estimate of economists surveyed by Bloomberg was for a 9.9 percent drop. Imports fell 23.3 percent, leaving a trade surplus of ¥823.5 billion, the highest since March 2010.
Even after coming off an 18-month high earlier this month, the yen has gained 9 percent against the dollar so far this year, eroding the competitiveness of the nation’s products overseas and hurting the earnings of exporters. Concern about the impact of the yen was on show over the weekend as Finance Minister Taro Aso and his U.S. counterpart, Treasury Secretary Jack Lew, disagreed over the seriousness of recent moves in the foreign-exchange market.
“Exports are getting a hit from the yen’s gains and weakness in overseas demand, especially in emerging nations,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo, who added that last month’s earthquakes in Kumamoto also will likely slow exports. “There’s a high chance that Japan’s economy will return to contraction in the April-June period as domestic consumption and exports look weak.”
Monday’s report also shows that:
Exports to the U.S. fell 11.8 percent in April from a year earlier, while shipments to the EU rose 9.9 percent.
Exports to China, Japan’s largest trading partner, dropped 7.6 percent.
Imports fell 23.3 percent, the biggest decline since October 2009.
Oil and liquefied natural gas contributed the most to the decline. The petroleum and coal tax was raised in April, which also could affect declines in energy imports.
The temblors hit Kyushu in mid-April, and halted production at factories belonging to companies such as Sony Corp. and Toyota Motor Corp.
They disrupted parts suppliers, including Aisin Seiki Co., delaying production of Toyota vehicles.
Exports of cars to the U.S. fell 4.4 percent in April from a year earlier, declining for the first time since November 2014. The disruptions from the earthquakes could further hurt auto exports, according to the ministry.
Supply chain disruptions may affect shipments of auto parts and electronic components, slowing Japanese exports to China and elsewhere in Asia in the April-June period, according to Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.
Gross domestic product expanded by an annualized 1.7 percent in the three months ended March 31, after a 1.7 percent contraction in the previous quarter.
The leap year provided an extra day of production and spending to bolster the data.