Japan Exports Recover in October Boosted by US Automobile Imports

Japan exports recovered in a year to October due to high demand in U.S.-bound car shipments after a sudden drop despite the sluggish global demand and unsettled trade war between the US and China, dimming the outlook for export-reliant Japan.

On Monday, the data from the Ministry of Finance showed an increase in exports by 8.2 percent in 12 months to October, less than the 9.0 percent gain forecast from the survey of Reuters.

The export grew after a revision of 1.3 percent annual drop in September due to natural disasters disrupting the international airport, the factory output, goods, and inbound tourism. Data on Gross Domestic Product declined lower than expected in the third quarter, stricken by natural disasters and slower exports.

While the economy is expected to return to growth this quarter as temporary effects from natural disasters fade, Japanese policymakers remain wary about the overall economic impact of global trade friction and slowing external demand.

Although, the momentum is diminishing amid sluggish shipments to Asia because of China’s slowdown, according to the senior economist at SMBC Nikko Securities, Koya Miyamae. “The U.S.-China trade war has not yet had much impact on Japan’s exports, but it warrants attention given that it could cause full-blown effects from next year onwards,” he added.

Exports to China increased to 9.0 percent in the year to October driven by automobiles and plastic raw materials after a drop the month before. Meanwhile, shipments to Asia accounted about more than half of Japan total exports grew by 7.3 percent.

Exports to the US rose by 11.6 percent in the year to October driven by shipments of cars, estimated to 154,085 and grew by 3.0 percent year-on-year and rose for the first time in five months.

The US raised its concern on unfair trade with Japan and China, shipping millions of cars to North America while blocking imports of U.S. autos and farm products.  

Trade talks between US and Japan are scheduled in September to protect Japanese auto manufacturers from further tariffs on exports with the US representing about two-thirds of $69 billion annual trade surplus.