Business / Economy

Hit by weak exports to China, Japan ran ¥82 billion trade deficit in November

Kyodo, Bloomberg

Japan logged a goods trade deficit of ¥82.08 billion ($749 million) in November, hit by weak exports to China amid a slowdown in the world’s second-largest economy, government data showed Wednesday.

The trade deficit followed a revised ¥15.66 billion surplus in October, according to a preliminary report by the Finance Ministry.

In the reporting month, exports dropped 7.9 percent from a year earlier to ¥6.38 trillion, down for the 12th straight month, and imports tumbled 15.7 percent to ¥6.46 trillion, falling for the seventh consecutive month, the ministry said.

Private-sector economists pointed out that imports dropped in November amid sluggish demand after the consumption tax rate was raised to 10 percent from 8 percent on Oct. 1.

However, “imports could recover somewhat after the negative impact of the tax hike wanes,” said Yutaro Suzuki, an economist at the Daiwa Institute of Research.

Suzuki also expects Asia-bound exports, led by semiconductor and other electronics parts, could pick up and serve as a driving force of shipments as companies in the region step up preparations for the production of devices using fifth-generation wireless network services.

By region, exports to China, including auto parts and materials for chemical products, declined 5.4 percent to ¥1.31 trillion, while imports of items such as mobile phones and computers plunged 16.4 percent to ¥1.58 trillion. Demand for those items weakened in Japan following the tax hike. As a result, Japan incurred a deficit of ¥268.02 billion against its biggest trading partner.

With the whole of Asia, including China, Japan’s trade surplus nearly tripled to ¥481.23 billion following declines in imports of mobile phones from China and electronic components from Taiwan.

Among other partners, Japan’s trade surplus with the United States shrank 16.1 percent from a year earlier to ¥523.21 billion, the third consecutive monthly decline, weighed down by weak demand for automobiles and construction machinery.

With the European Union, Japan saw a trade deficit of ¥145.75 billion, marking the fifth straight monthly fall.

The figures were compiled on a customs-cleared basis.

The ongoing drop in overseas shipments adds to headwinds facing the economy, which is forecast to shrink 2.6 percent this quarter, as growth also takes a hit from domestic factors including typhoon damage and the recent hike in the sales tax.

Technology-related exports offered some signs of improvement, though the data was mixed. Overseas shipments of equipment used to make semiconductors rose 4.1 percent in value terms, much better than the average double-digit declines of April to September, but the volume of shipments still fell nearly 8 percent. Chip exports fell by just 1.3 percent, while volumes eked out a gain.

“With signs the worst is over for the global slowdown, exports should come back into positive territory some time in the first half of next year,” said economist Takeshi Minami at Norinchukin Research Institute.

The Bank of Japan says uncertainty surrounding overseas economies presents the biggest risk to its forecasts, but a ¥13 trillion spending package unveiled this month by the Abe administration has given the BOJ breathing room to hold off from adding stimulus at its meeting Thursday and over the coming months.

Better factory data from China and Germany and an uptick in purchasing manager’s indexes in Asia suggest global manufacturing is finishing 2019 on less shaky footing. That could mean a less gloomy outlook for exports next year. A “phase one” trade deal between Washington and Beijing is also a positive, though details remain vague

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