Japan exports in April fall most since 2009 as pandemic hits demand

Tokyo

JAPAN'S exports in April fell the most since the 2009 global financial crisis as the world's third-largest economy braced for a deeper slide into recession, with the coronavirus pandemic taking a heavy toll on external demand.

The trade data underscored the challenge policymakers face in balancing the need to contain the virus, and restarting parts of the battered economy.

Data from the Ministry of Finance on Thursday showed that exports fell 21.9 per cent in the year to April as US-bound shipments fell 37.8 per cent, the fastest decline since 2009, with car exports there plunging 65.8 per cent.

It followed a 11.7 per cent fall in March, and posted the steepest drop since a 23.2 per cent decline in October 2009 when global demand evaporated due to the global financial crisis.

Exports to China, Japan's largest trading partner, fell 4.1 per cent in the year to April.

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Shipments to Asia, which account for more than half of Japanese exports, declined 11.4 per cent, and exports to the European Union fell 28.0 per cent.

Japan fell into recession for the first time in 4½ years in the first quarter, putting the nation on course for its deepest postwar slump as the pandemic ravages businesses and consumers.

Monday's first-quarter GDP data underlined the broadening impact of the outbreak, with exports plunging the most since the devastating March 2011 earthquake and tsunami as global lockdowns and supply chain disruptions hit shipments.

Analysts warn of an even bleaker picture for the current quarter as consumption crumbled after the government in April requested citizens to stay home and businesses to close.

Factory activity reeling

The decline in Japan's factory activity accelerated in May as output and orders slumped, highlighting increasing stress in the manufacturing sector from the coronavirus pandemic.

The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) slipped to a seasonally adjusted 38.4 from a final 41.9 in April, its lowest since March 2009.

The headline figure was pulled down by sharp declines in output, new orders and the backlog of work, which all contracted at the fastest pace in more than a decade.

"While the rate of decline in services activity has eased very slightly, plummeting demand for goods is finally catching up with the manufacturing sector," said Joe Hayes, economist at IHS Markit, which compiled the survey.

A bright spot in the gloomy data were employment conditions, which were flat. The index stayed below the 50.0 threshold that separates contraction from expansion for a 13th month.

The pandemic has been particularly disruptive for global supply chains, causing trouble for trade-reliant nations such as Japan.

Japan's services sector also remained deep in contraction, although the pace of decline moderated slightly.

The PMI index edged up to 25.3 on a seasonally adjusted basis from a record low of 21.5 in the previous month.

The composite PMI, which includes both manufacturing and services, stood at 27.4 in May, slightly above the previous month's final of 25.8. REUTERS