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Japan exports rebound in October, driven by US car shipments
[TOKYO] Japan's exports rebounded in the year to October, reversing from the prior month's surprise drop as US-bound car shipments grew, although slowing global demand and the intensifying US-China trade war cloud the outlook for export-reliant Japan.
Ministry of Finance (MOF) data out on Monday showed exports rose 8.2 per cent in October from a year before, slightly below a 9.0 per cent gain expected by economists in a Reuters poll. The export growth followed a revised 1.3 per cent annual drop in September, which analysts say was caused by natural disasters that forced a closure of an international airport and crimped factory output, distribution of goods and inbound tourism.
Monday's trade news followed gross domestic product data issued last week that showed Japan's economy, the world's third largest, shrank more than expected in the third quarter, hit by the natural disasters and sluggish exports. While the economy is expected to return to growth this quarter as temporary effects from natural disasters fade, Japanese policymakers remain wary about the overall economic impact of global trade friction and slowing external demand.
"Japan's exports rebounded from a decline caused by natural disasters, but they are losing momentum compared with last year due to sluggish shipments to Asia caused by China's slowdown," said Koya Miyamae, senior economist at SMBC Nikko Securities. "The US-China trade war has not yet had much impact on Japan's exports, but it warrants attention given that it could cause full-blown effects from next year onwards," he added.
Monday's trade data showed exports to China, Japan's biggest trading partner, rose 9.0 per cent in the year to October led by cars, car engines and plastic raw materials, following the prior month's drop. Shipments to Asia, which account for more than half of Japan's overall exports, rose 7.3 per cent.
Japan's exports to the United States grew 11.6 per cent in the year to October, led by shipments of cars. US-bound auto exports stood at 154,085 cars, up 3.0 per cent year-on-year, rising for the first time in five months.
President Donald Trump has criticised Japan as well as China over trade, asserting that Tokyo treats the United States unfairly by shipping millions of cars to North America while blocking imports of autos and farm products. In September, Prime Minister Shinzo Abe and Trump agreed to start trade talks in an arrangement that appeared, at least for now, to protect Japanese automakers from further tariffs on their exports, which make up about two-thirds of Japan's US$69 billion annual trade surplus with the United States.
Imports from the United States rose 34.3 per cent in October, led by feed corn, liquefied petroleum gas and crude oil, helping reduce Japan's trade surplus with the United States by 11.0 per cent versus the same month last year to 573.4 billion yen (s$6.99 billion).
Overall imports rose 19.9 per cent in the year to October reflecting a spike in crude oil prices as well as effects of natural disasters. The rise in imports exceeded the median estimate for a 14.5 per cent annual increase, resulting in a trade deficit of 449.3 billion yen.