Japan Faces Growth Setback Amidst Asia Export Decline, Led by China

Japan exports fell for the first time in a month in more than two years as the third-largest economy in the world’s main trading partners, China and the rest of Asia, saw weaker demand.

For the first time since February 2021, exports decreased 0.3% in July compared to the same month last year, according to preliminary statistics provided Thursday by the Japanese Ministry of Finance. Exports fell almost 37% to Asia, while those to China fell 13.4% for the ninth consecutive month, highlighting the severity of the slump on the mainland.

Fortunately, the increase in exports to the US and Europe at the time entirely offset [the weakening in China exports], but as you are aware, there are many concerns regarding the US and European economies.

Japan’s domestic demand did not significantly increase, as evidenced by July’s 13.5% drop in imports. Despite Japan swinging to a trade deficit of 78.7 billion yen (539.6 million dollars), falling far short of a median prediction for a 24.6 billion yen surplus, both export and import data were somewhat better than anticipated.

Read next: Saudi Arabia’s Crude Oil Exports Plummet to Lowest Level in Nearly 2 Years

Bank of Japan’s Unlikely Change in Approach

Although economists anticipate that global demand will fall in the second half of the year, a spike in imports had driven a preliminary 6% growth in Japan in the second quarter.

Chinese Premier Li Qiang declared on Wednesday that his nation would make an effort to meet its annual economic goals. His comments followed a string of economic data that disappointed, leading economists to caution that China might not be able to meet its goal of 5% growth.

The Bank of Japan is unlikely to be motivated to change from its ultra-easy monetary policy intended to reflate the economy, especially when coupled with weakening domestic demand.

Core machinery orders, which some consider to be a leading sign of capital expenditure despite their volatility, fell 5.8% in July from a year earlier, according to separate statistics made public by the Japanese government.

Read next: Three Factors Making Trump’s Latest Charges Difficult to Dismiss

Source: www.cnbc.com