Japan's export growth decelerates amid global economic uncertainty
Date
7/18/2024 3:38:07 AM
(MENAFN) Japan's export sector saw growth for the seventh consecutive month in June, although the pace slowed to its lowest level since late last year. This deceleration raises concerns about the potential impact of China's economic slowdown on Japan's trade-reliant economy. The slower export growth could undermine policymakers' hopes that robust external demand might compensate for weak domestic consumption. Japan's Economy is anticipated to rebound from an unexpectedly sharp contraction in the first quarter, but the latest data suggests a more challenging path ahead. According to the finance ministry, Japan's exports increased by 5.4 percent in June compared to the same period a year earlier, which fell short of the 6.4 percent rise predicted by economists in a poll. This marks a significant drop from the 13.5 percent growth recorded in May.
The depreciation of the yen, which hit its lowest level in 38 years, has contributed to the higher value of exports; however, export volumes actually declined by 6.2 percent in June. Takeshi Minami, chief economist at the Norinchukin Research Institute, noted that aside from the support from a weaker yen, major economies like the United States, Europe, and China are not expected to grow sufficiently to bolster Japan's exports. He emphasized that there currently appears to be no global engine driving export growth. The trade data revealed that exports to China increased by 7.2 percent in value terms in June compared to a year earlier, mainly driven by demand for chipmaking equipment. However, this growth rate was significantly lower than the 17.8 percent rise observed in May. Meanwhile, shipments to the United States, Japan's key ally and market, grew by 11 percent year-on-year in June, whereas exports to the European Union declined by 13.4 percent.
In terms of imports, the value increased by 3.2 percent in June from a year earlier, which was considerably less than the 9.3 percent rise that economists had forecast. This shift turned the trade balance into a surplus of 224 billion yen (USD1.44 billion), marking the first trade surplus in three months. Previous estimates had projected a deficit of 240 billion yen. By comparison, imports had risen by 9.5 percent in May, indicating a notable slowdown in June.
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