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Japan's exports drop most since 2016 amid trade war, typhoon
JAPAN'S exports suffered their largest drop in three years in October, as the US-China trade war continued to hit global demand and extreme weather disrupted output at home.
Exports fell 9.2 per cent from a year ago, dropping for an 11th month and extending the longest streak of monthly declines since 2016, Ministry of Finance data showed on Wednesday.
Economists had forecast a 7.5 per cent slide. Exports to China and the US, Japan's two biggest markets, logged double-digit falls. Drops in automobile and steel shipments were major factors, along with damage from last month's super typhoon.
Despite rumblings that Washington and Beijing are nearer to a truce that could roll back tariffs, global manufacturers remain in a funk over the global economy and uncertainty surrounding the trade outlook.
Takeshi Minami, economist at Norinchukin Research Institute, said the continued weakness in exports could be a factor that pushes the Japanese government to add to the size of a stimulus package announced earlier this month, partly to shield the economy from the global slowdown.
"We may see politicians increasingly calling for a sizeable economic package," he said.
Still, the latest data, partly distorted by bad weather, needn't be a cause for pessimism, Norinchukin's Mr Minami said, adding that there were further signs that the worst was over for the global tech sector.
Speaking after the data was released, a finance ministry official said that manufacturing disruption caused by Typhoon Hagibis may have contributed to October's drop in auto trade.
The export slump has made the economy more dependent on consumer demand at a particularly vulnerable time. A sales tax hike introduced last month is expected to weigh heavily on spending this quarter.
South Korean boycotts of Japanese products likely contributed to the drop in Japan's exports of autos and food to its neighbour, according to economist Yutaro Suzuki at Daiwa Institute of Research Holdings.
Since summer, the two countries have been embroiled in their own trade spat stemming from a dispute over Japan's colonial past. Exports to Korea fell 23 per cent in October. BLOOMBERG