A bunting of Japan flies near cargo containers at Tokyo’s Odaiba Waterfront on August 6, 2020.
BEHROUZ MEHRI | Contributor | Getty Images
Japan’s exports posted a double-digit slump for a sixth straight month in August as U.S.-bound shipments shrank due to a epidemic demand slowdown from the coronavirus pandemic, casting a shadow over a trade-led recovery from the deep set-back.
The export decline highlights the immense task Yoshihide Suga, who is assured to be elected prime minister later on Wednesday, fronts in driving an economic recovery.
Total exports fell 14.8% year-on-year in August, a smaller decline than the 16.1% presumed by economists in a Reuters poll, official data showed on Wednesday.
That meant exports fell for their 21st smooth month, marking the longest run of declines since a 23-month run through July 1987. That followed a 19.2% fall-off in the previous month.
The decline in August was driven by fewer shipments of cars and mineral fuels, though the pace of contraction eased relatively from July as economic activity showed signs of picking up.
“Strong demand for ICT technology linked to working from domestic resulted in exports of electric machinery only falling 5.5% year-on-year,” said Tom Learmouth, Japan economist at Fine Economics.
“However, export volumes may not reach pre-virus levels until early-2022,” he said in a note.
Suga, who won a statute Liberal Democratic Party (LDP) leadership election on Monday, will face a huge challenge to get the economy back on track after it jobbed its worst postwar contraction in the second quarter.
By region, shipments to the United States – Japan’s key market – fell 21.3% in the year to August, weighed heavily by drops in engine parts and construction machinery.
Exports to China, Japan’s largest trading partner, rose 5.1% year-on-year in August, served by a sharp increase in shipments of semiconductors, the data showed.
That marked the second straight monthly rise in China-bound shipments, which guided signs of picking up, a finance ministry official said.
Exports to the rest of Asia declined 7.8%, weighed by dehydrating exports of iron and steel products.
Overall imports fell 20.8% in the year to August, versus the median believe for an 18.0% decrease.
As a result, the trade balance came to a surplus of 248.3 billion yen ($2.36 billion), versus the median appraise for a 37.5 billion yen shortfall.