Business / Economy

Japan logs trade deficit for third straight month on weak exports to Asia

Kyodo

Japan logged a goods trade deficit for the third consecutive month in September, weighed down by weak exports to China, South Korea and other Asian countries, government data showed Monday.

The trade deficit came to ¥122.98 billion, following a revised ¥143.53 billion deficit in August, according to a preliminary report by the Finance Ministry.

Exports in September dropped 5.2 percent from a year earlier to ¥6.37 trillion, marking the 10th straight monthly decline.

Imports were down 1.5 percent to ¥6.49 trillion, falling for the fifth consecutive month, due to decreasing purchases of commodities, including crude oil from Saudi Arabia.

For the first half of fiscal 2019, Japan’s goods trade recorded a deficit of ¥847.99 billion, marking the second consecutive half-year period of red ink.

During the April-September period, exports sagged 5.3 percent and imports sank 2.6 percent.

In September alone, exports to China, including auto parts and semiconductor manufacturing equipment, declined 6.7 percent from a year earlier to ¥1.18 trillion on the back of a slowdown in Asia’s biggest economy and its trade tensions with the United States.

Imports were down 1.0 percent to ¥1.62 trillion, leaving Japan with a deficit of ¥441.07 billion against China, its biggest trading partner.

Masato Koike, an economist at the Dai-ichi Life Research Institute, said Japan’s “exports could recover, albeit moderately” as there were signs of a rebound in demand for electronic devices in China in September, compared with the past few months, and also due to a recent trade truce between Beijing and Washington.

U.S.-China trade tensions have begun to ease somewhat after Washington agreed to suspend a planned tariff hike on Chinese goods set to take effect Oct. 15.

Still, Koike said risk factors remain, including weakness in the U.S. economy shown by recent data.

With the whole of Asia, including China, Japan registered a trade deficit of ¥260.93 billion, also partly due to sluggish exports to South Korea, which some analysts attributed to its stagnating economy.

Among other partners, Japan’s trade surplus with the United States fell for the first time in seven months to ¥564.12 billion, down 3.5 percent, as demand fell for exports of cars and auto parts as well as aircraft engine parts.

Against the European Union, Japan saw a trade deficit of ¥127.34 billion, led by a decline in shipments of aircraft engine parts and lithium batteries.

The figures were compiled on a customs-cleared basis.

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