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Japan exports drop for 8th straight month as global economic outlook darkens
[TOKYO] Japanese exports fell for an eighth straight month in July, as slowing growth and trade battles raise fears of a global recession.
The value of shipments abroad dropped 1.6 per cent in July from a year earlier, according to the finance ministry on Monday. Economists surveyed by Bloomberg had estimated a 2.3 per cent drop. The trade balance was a deficit of 249.6 billion yen (S$3.25 billion).
Domestic demand has supported Japan's trade-driven economy during this year's export slump, but the darkening global outlook begs the question how long personal consumption and capital investment can carry the day.
A slowdown in the global economy, especially in China, trade battles and geopolitical crises have the world economy headed for its weakest expansion since the global financial crisis.
In addition to suffering the effects of the US-China trade war, Japan is battling South Korea on another trade front, while trying to avoid auto tariffs in its trade talks with the US.
All those risk factors and others have pushed the yen, seen as a haven currency, to near the strongest level this year, making Japanese exports less competitive.
"Looking ahead, the recent strength in the yen and slowing Asian demand are likely to weigh on exports. Another risk is that Japan's auto sector becomes a target of U.S. protectionism," Bloomberg's Economists said.
Imports fell 1.2 per cent in July, versus economists' median estimate of a 2.3 per cent drop.
Exports to China fell 9.3 per cent in July, while shipments to the US rose 8.4 per cent.
Shipments to Europe increased 2.2 per cent.