Exports in free fall as US-China trade war jolts Japan’s economy

Exports in July dropped by 1.6 per cent from a year earlier, while manufacturers’ business confidence also fell

The ongoing China-US trade war, as well as Japan’s trade dispute with South Korea, threaten to further dim the outlook for manufacturers

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The international cargo terminal at the port of Tokyo. Photo: AFP

Published: 10:17am, 19 Aug 2019Updated: 11:10pm, 19 Aug 2019

Japan’s exports slipped for an eight month in July, while manufacturers’ confidence turned negative for the first time in over six years as slowing global growth and the prolonged China-US trade war took a toll on the world’s third-biggest economy.

The gloomy data adds to the challenge for Japanese policymakers worried that a prolonged downturn in external demand will drive a sharp economic downturn at home.

Exports in July fell 1.6 per cent from a year earlier, Ministry of Finance data showed on Monday, dragged down by car parts and semiconductor production equipment. That compared with a 2.2 per cent decrease expected by economists.

Containers at an industrial port in Tokyo, Japan. Photo: Reuters

Separately, the Reuters Tankan survey showed Japanese manufacturers’ business confidence turned negative for the first time since April 2013 in August, underlining the darkening outlook for the export-reliant economy.

Anxiety about a global slump rose to fever pitch recently after an inversion in the US Treasury yield curve implied a growing risk of a recession there, and data showed Germany’s economy was in contraction and China’s was worsening.

Export-reliant economies such as Japan have been hit hard by the Sino-US tariff row, which has already upended supply chains and undermined global trade, investment and corporate earnings.