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FILE PHOTO: Shipping containers are seen at a port in Tokyo, Japan - Reuters
TOKYO (Reuters): Japan’s exports fell in January for a 14 straight month while a key gauge of capital spending tumbled, as the world’s third-largest economy grapples with the impact of the coronavirus outbreak and a recent sales tax hike.
Ministry of Finance (MOF) data out on Wednesday showed Japan’s exports fell 2.6% year-on-year in January, smaller than a 6.9% decrease expected by economists and dragged by US-bound shipments of cars and construction and mining machinery. It followed a 6.3% fall in December.
Separate data on Wednesday showed core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 12.5% month-on-month in December.
The data underscores the challenge Japan faces in overcoming external and domestic pressures, with little room left for policy maneuvering and the economy teetering on the edge of a recession.
Data out Monday showed the economy shrank the most since 2014 in the last quarter as domestic demand took a hit from an October tax hike and the coronavirus clouded the outlook.
The virus has killed more than 2,000 people in mainland China and it has already taken a toll on China’s economy – Japan’s largest trading partner – hampering supply chains for car manufacturers to smartphone makers and disrupting tourism.
In terms of volume, Japan’s exports declined 1.6% year-on-year in January in a sixth straight month of decline.
By region, Japan’s exports to China fell 6.4% in value year-on-year January, dragged down by chemicals, car parts and electronics parts such as integrated circuits.
China-bound exports tend to slow before the Lunar New Year holidays, which fell in late January, ministry officials said, adding that they were not yet sure how the coronavirus had affected shipments to the country.
Exports to Asia, which account for more than half of Japan’s overall exports, fell 3.2% year-on-year in January, marking the 15th straight month of declines.
US-bound shipments, a key destination for Japanese cars and electronics, fell 7.7% in January, posting a sixth straight month of declines.
Reflecting weak domestic demand, Japan’s imports fell 3.6% year-on-year in January, versus the median estimate for a 1.3% decrease, dragged down by demand for liquefied natural gas, mobile phones from China and coal.
As a result, Japan’s trade balance came to a deficit of 1.313 trillion yen ($11.94 billion), versus the median estimate for a 1.695 trillion yen deficit.
