Japan exports strengthen but China clouds outlook
Japan’s exports rose at the fastest pace in five months in June, due to a pick-up in sales of cars and electronics but there are lingering concerns that China’s economic slowdown will hurt Japanese shipments in the future.
Exports rose an annual 9.5 per cent in June according to Finance Ministry data, less than the median estimate for a 10.0 per cent rise given by economists in a Reuters poll. It followed a 2.4 per cent year-on-year rise in May.
Separate data from the Bank of Japan also showed that real exports rose in June from the previous month in a tentative sign that overseas demand stabilised.
Policymakers are counting on exports to supplement Japan’s domestic-demand driven economy, but China’s slowdown could curb Japan’s growth by slowing its exports.
“I expect gradual recovery in exports but there are downside risks, because exports to China may not do that well,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “The pace of Japan’s economic growth could depend more on domestic capital expenditure, but growth may not be strong enough to meet the Bank of Japan’s expectations.”
Exports destined for China, Japan’s largest trading partner, rose 5.9 per cent year on year in June, compared with May’s 1.1 per cent annual increase as shipments of electronics and plastics rose, Finance Ministry data showed.
Shipments to Asia rose 10.1 per cent year on year in June, versus a 3.3 per cent annual increase in the previous month.
Japan’s exports to the United States rose an annual 17.6 per cent in June, far above the 7.4 per cent seen in May, thanks to higher shipments of cars and pharmaceuticals.
Compared with the previous month, real exports rose 1.0 per cent in June, separate data from the Bank of Japan showed Thursday. That compares with a 5.1 per cent decline from April to May.
Total imports fell 2.9 per cent in June from a year earlier according to the Finance Ministry. That was less than the poll’s median estimate for a 4.0 per cent decrease.
The trade balance showed a deficit of 69.0 billion yen (HK$4.3 billion), versus the median estimate for a 5.4 billion yen surplus.
Japan’s economic growth is expected to have slowed sharply between April and June as companies produced fewer goods while lowering inventories, and as exports slowed from the previous three months.
Economists expect growth to accelerate in the current quarter due to gains in consumer spending, but close trade ties mean Japan could be hit by China’s slowing growth.
