Japan’s export growth slows; import costs weigh on hopes of recovery


  • September exports up 13.0% from f’cast, up 11.0%
  • Supply disruptions cloud outlook for Japanese economy
  • Rising import costs stoke stagflation fears
  • Terms of trade deteriorate as imports exceed exports
  • Trade deficit could hamper Kishida’s attempt to close the wealth gap

TOKYO, Oct. 20 (Reuters) – Japanese export growth weakened to its lowest level in seven months in September, as an increase in imports added to fears that problems in the global supply chain were caused by the pandemic do not derail the fragile economic recovery of the country.

Exports are running out of steam at a time when a weaker yen and soaring oil prices have pushed up import costs, hurting the terms of trade in resource-poor Japan and potentially undermining the Prime Minister’s commitment Fumio Kishida to correct the differences in wealth.

Trade data will be among the factors the Bank of Japan examines when it releases new quarterly growth and inflation projections at its policy meeting later this month.

Exports rose 13.0% in September from a year earlier, data from the Ministry of Finance showed Wednesday, compared with a median market forecast of an 11.0% increase, shipments of cars fell 40.3%, the first drop in seven months.

Although ahead of expectations, export growth weakened from 26.2% the previous month and was the slowest since February.

“While the effect of cuts in auto production will ease once the bottlenecks are resolved, fundamental concerns about spikes in growth in the United States and China remain unchanged,” said Kota Suzuki, economist at Daiwa Securities.

“Exports will still be in a weak state for a while.”

Shipments to China, Japan’s largest trading partner, increased 10.3% in September year-on-year, driven by semiconductors and plastics, while auto exports grew. fell 71.9%.

Exports to the United States, another key destination for Japanese goods, fell 3.3% to mark the first decline in seven months, as demand for cars and planes weakened.

Imports, meanwhile, jumped 38.6% in the year ending September, following the 44.7% gain in the previous month, due to rising costs of petroleum, coal and drugs.

Imports have now increased for eight straight months, fueling concerns that the recent weakening of the yen and soaring oil prices are adding to the cost of living in Japan.

“Rising import prices have hurt Japanese companies’ terms of trade,” said Ryosuke Katagi, market economist at Mizuho Securities. “While consumer price inflation remains stagnant in Japan, businesses cannot pass soaring costs on to consumers, which hurts corporate profits.”

Japan’s trade balance fell into deficit for a second consecutive month at 622.8 billion yen ($ 5.43 billion), with the cost of imports in yen being the highest since November 2018.

The data may add to the concerns of policymakers hoping for an export-led recovery, while rising import costs will fuel fears of stagflation, or a combination of rising inflation and stagnant growth.

Policymakers are under pressure to maintain Japan’s economic recovery from last year’s pandemic-induced slump, despite additional tensions resulting from a resurgence of the pandemic in other parts of Asia.

The world’s third-largest economy is expected to have grown 0.8% in the third quarter, according to a Reuters poll, as parts shortages and supply constraints caused by Asian plant shutdowns disrupted automakers. Read more

($ 1 = 114,6200 yen)

Reporting by Kantaro Komiya, Tetsushi Kajimoto; edited by Richard Pullin

Our Standards: Thomson Reuters Trust Principles.


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