Japan logged a goods trade deficit of ¥1.64 trillion ($14.95 billion) in 2019, marking a second straight year of red ink amid slowing demand in China, government data showed Thursday.
Exports fell 5.6 percent from a year earlier to ¥76.93 trillion, outpacing a 5.0 percent decrease in imports to ¥78.57 trillion, according to a preliminary report by the Finance Ministry.
By region, Japan saw a deficit of ¥3.76 trillion with China, its largest trading partner in terms of the total sum of imports and exports.
The margin of red ink against China expanded for the first time in four years due to weak demand there for products from Japan, including car components and manufacturing equipment for semiconductor devices, on the back of Beijing’s trade tensions with Washington.
Across Asia, Japan netted a surplus of ¥3.93 trillion, but its black ink shrank for a second year.
Japan had a surplus of ¥6.63 trillion against the United States, a larger margin than the previous year, with robust demand for manufacturing equipment for integrated circuit chips and pharmaceutical products contributing.
With Europe, Japan logged a record deficit of ¥756.37 billion as exports of ships and pharmaceutical products declined.
Japan’s goods trade deficit for December was ¥152.52 billion, according to a separate preliminary report. Exports fell for the 13th straight month, down 6.3 percent to ¥6.58 trillion, while imports declined 4.9 percent to ¥6.73 trillion, falling for the eighth consecutive month.
The figures were compiled on a customs-cleared basis.
The ongoing drop in exports adds to headwinds facing a Japanese economy forecast to have shrunk an annualized 3.7 percent in the fourth quarter, as domestic factors — including typhoon damage and a hike in sales tax — hit growth.
Still, accelerating gains in shipments of chipmaking equipment, which rose 25.8 percent in December, could indicate a turnaround in the technology industry, whose yearlong slump has been a large factor in Japan’s trade woes.
“The bottoming out of the adjustments in the IT sector is a positive factor, and that should support a recovery,” said Barclays economist Kazuma Maeda, who noted that a clear rebound would take time.
The trade agreement signed this month between the U.S. and China should also brighten the outlook for shipments in 2020, although tensions could flare up again.
In the near-term, there’s also less onus now on Japan’s exports to support growth after the Abe administration unveiled last month ¥13.2 trillion in economic stimulus measures. That package was a big reason the Bank of Japan raised its growth forecast this week for the coming fiscal year, though it warned that overseas risks still need careful monitoring.
Overall shipments of semiconductor-making equipment rose 25.8 percent, much better than the average double-digit declines of April-September. Chip exports increased by 2.6 percent.