Japanese exports remain weak amid slowing global growth

19, Mar. 2019

TOKYO, NNA - Japanese exports posted a year-on-year drop for the third straight month in February, Ministry of Finance data showed Monday, indicating slower global demand is weighing on the economy’s lukewarm growth.

The Bank of Japan’s real trade indexes, also released Monday, showed real exports rebounded from a month earlier in February after a slump in January, but economists and policy makers alike are watching for a further global slowdown amid the lingering U.S.-China trade spat.

Key points:

- Japanese exports fell 1.2 percent from a year earlier after declining 8.4 percent in January, coming in weaker than consensus forecast for a 0.7 percent gain, hit by lower demand for motor vehicles, steel products and chip-making equipment.

- Japanese imports slipped 6.7 percent for the second straight year-on-year drop after the 0.8 percent dip in January, led by lower purchases of crude oil and petroleum products.

- As a result, there was a trade surplus of Y339.0 billion ($3 billion), the first in five months after a deficit of Y1.42 trillion in January.

- Exports to China rose 5.5 percent year on year, reversing the 17.4 percent fall in January, the first increase in three months. Shipments to the world’s second-largest economy often fluctuate widely for the first two months of year due to the timing of Lunar New year holidays.

- The real export index calculated by the BOJ based on MOF’s trade statistics rose 6.0 percent month on month in February, rebounding from the 5.3 percent drop in January, but the average of January and February index levels was still 2.7 percent lower than the average of October-December indexes.

Takeaway:

- After its latest two-day policy meeting, the BOJ board on Friday maintained its assessment that the domestic economy’s moderate expansion is and will remain intact.

- But the central bank did lower its view on exports and industrial production, reflecting slowing growth in China and Europe.

- Japan’s prolonged but lackluster economic growth is reaching a turning point facing weaker global demand and sluggish domestic consumption amid slow wage hikes.