Japan Exports Slumped in September, Dim Economic Outlook Amid Trade War

Exports of Japan dropped in September for the first time since 2016 due to lesser shipments to large nations of China and the US, dimming the incoming third-quarter economic outlook with larger impact of worsening US-China trade war.

Reuters data implies a third of Japanese companies, including other businesses and not just exporters, relayed having problems due to the trade war and concerns on the fall of businesses.

At the same time, Japanese policymakers are worrisome with the overall economic impact of the trade war. External concerns of natural disasters add conflict to this issue, affecting production and physical distribution.

Although the trade war has not physically affected the trading activity, a sluggish external demand has worsened the outlook of a sluggish outcome in the July quarter of the year.

A chief economist at Norinchukin Research Institute, Takeshi Minami, noted that the slight augmentation of the economic output was boosted by firm consumption and strong capex without any impact from external demand.

Yet for Japan, lesser shipments to America and China raises concern as the account for 20 percent of Japanese exports.

Data on Japanese exports released on Thursday showed a drop in exports by 1.2 percent in September than last year. Economists’ forecast based on Reuters survey shows that 1.9 percent in anticipated after a 6.6 percent gain in August. This has been the first decline since November of 2016.

By the number, the volume of exports declined to 4.8 percent in September of the year, which was the first drop since seven months ago.

Japan’s exports to the United States dropped by 0.2 percent in nine months due to a decline in shipments for construction and mining machinery, as well as, auto parts and medicines.

On the other, imports from the United States grew to 3.1 percent in September because of crude oil and liquefied petroleum gas. This narrowed the trade surplus of the nation with the US by 4.0 percent year-on-year to 590 billion yen ($5.24 billion).

Meanwhile, the US is willing to discuss open trade talks with Japan, describing them to be relevant but performing less on the market for U.S. exports, according to the U.S. Trade Representative’s office conveying to the Congress on Tuesday.