Japan’s exports and imports in May both posted the largest year-on-year drops in more than 10 years, reflecting rapidly weakened domestic and overseas demand as the coronavirus pandemic continued to slow economic activities globally, government data showed Wednesday.
Exports plunged 28.3 percent from a year earlier to ¥4.18 trillion ($39 billion), the sharpest drop since a 30.6 percent decline in September 2009 in the wake of the global financial crisis, according to a preliminary report by the Finance Ministry. Exports were down for the 18th consecutive month.
By item, car exports decreased 64.1 percent, the biggest fall since April 2011 when they nosedived 67.1 percent after a massive earthquake and tsunami the previous month in northeastern Japan forced a halt in production. The latest figure followed a 52.6 percent tumble in April.
Exports of car parts slid 57.6 percent.
Overall imports fell 26.2 percent to ¥5.02 trillion, also logging the biggest decrease since October 2009 when they dropped 35.5 percent, with purchases of energy resources such as crude oil and aircraft shrinking, the ministry said. The figure was down for the 13th month in a row.
In April, imports saw a more moderate fall of 7.1 percent, reflecting a recovery in purchases from China, whose economy was restarting after the country was recovering from the world’s first outbreak of the virus.
The goods trade deficit in May stood at ¥833.39 billion, marking the second straight month of red ink.
“It’s hard to predict upcoming developments, but given the current domestic and overseas situation, the virus impact will likely continue to be seen on exports and imports figures in June,” a ministry official told reporters.
By country, Japan saw its smallest goods trade surplus with the United States since comparable data became available in January 1979, with the figure plummeting 97.4 percent to ¥10.26 billion. A 78.9 percent dive in car exports from the previous year contributed most to the outcome.
Overall Japanese exports to the world’s biggest economy, the nation hardest hit by the virus pandemic both in terms of confirmed cases and deaths and with hard lockdowns seen in many major cities in May, declined 50.6 percent to ¥588.42 billion. Auto parts exports were also significantly lower, diving 73.2 percent.
Imports from the United States stood at ¥578.16 billion, down 27.5 percent, with those of aircraft, their engine parts and coal on the decline.
Exports to China fell 1.9 percent to ¥1.13 trillion, with declines in demand for items such as chemical product materials and car parts surpassing pick-up in demand for refined copper and other goods. In April, Japan’s exports to the world’s second-largest economy fell 4.0 percent from a year earlier.
Imports from China dropped 2.0 percent to ¥1.51 trillion due to sluggish demand for products such as clothing, compared to an 11.8 percent increase logged in the previous month. As a result, Japan saw a ¥385.07 billion trade deficit with its Asian neighbor.
With the whole of the rest of Asia including China, Japan saw a trade surplus of ¥5.88 billion, as exports fell 12.0 percent to ¥2.74 trillion and imports dropped 11.8 percent to ¥2.74 trillion. Steel exports to Thailand declined, while petroleum product imports from South Korea significantly fell.
As for the European Union, Japan’s exports to the region decreased 33.8 percent to ¥363.84 billion and imports slipped 29.6 percent to ¥575.17 billion, leading to a ¥211.33 billion ttrade deficit. Exports of vehicles to Germany plunged, and airplane imports from France slumped.
All figures were compiled on a customs-cleared basis.
Japan has historically been criticized for racking up a huge trade surplus, not buying enough from the countries flooded with its products. Data shows April last year is the last month in which both imports and exports weren’t negative, showing how exports and imports have been falling for more than a year.
Japan’s growth relies on trade and tourism, as well as domestic small and medium consumer-oriented businesses, all of which have been hurt by the travel, stay-home and social-distancing restrictions aimed at curbing the spread of COVID-19.
Japan has already slid into recession, defined as two straight quarters of contraction. The world’s third-largest economy had already slowed in the final quarter of last year before the virus reached a pandemic scale. The current quarter, through the end of June, is expected to show another contraction.
The Japanese government has announced massive bailouts to businesses and cash handouts to prop up the economy. It has also reopened the economy, allowing stores, amusement parks and restaurants to go on as before, while requesting seats be placed farther apart and people wear masks.
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