TOKYO- Japan’s exports fell in August for a second straight month, weighed by declines in China’s demand for steel and heavy oil and stoking fears of a downturn in the face of elevated interest rates.
Ministry of Finance (MOF) data showed on Wednesday exports fell 0.8 percent year-on-year in August, slower than economists’ median estimates of 1.7 percent decline and following a 0.3 percent drop in Japan’s overseas shipments. It was the second straight month of annual declines.
By destination, Japan’s shipments to China, its largest trading partner, fell 11 percent year-on-year in August, marking a third straight month of double-digit drops.
“The growth of the Chinese economy itself is weak, or at least that is what is being reflected,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Therefore … the double-digit decrease in exports suggests that the situation continues to be quite bad, and that the situation does not seem to have bottomed out.”
Exports to the United States rose 5.1 percent year-on-year in August, driven by shipments of cars, mining and construction machinery.
Japanese policymakers are counting on external demand to pick up the slack and offset weak consumer spending.
However, the trade data dashes hope for prospects for an export-led recovery.
Partly reflecting weak domestic demand, imports fell 17.8 percent , weighed by energy costs, whose base effects fade away.
As a results, the trade balance came to the deficit of 930 billion yen ($6.29 billion), marking two straight months in the red, the trade data showed.
Japan’s customs-cleared crude oil imports fell 3.0 percent in August from the same month a year earlier, the Ministry of Finance said also on Wednesday.
Japan, the world’s fourth-biggest crude buyer, imported 2.7 million barrels per day (13.303 million kiloliters) of crude oil last month, the preliminary data showed.
Japan’s imports of liquefied natural gas totaled 5.673 million tons last month, down 9.6 percent from a year earlier. Imports of thermal coal for power generation declined 31.5 percent in August to 8.385 million tons, the data showed.
On Tuesday, Japan said it will ensure stable and steady energy supply to the country even after the US imposed fresh sanctions related to Russia’s Arctic LNG 2 project, Japan’s Chief Cabinet Secretary Hirokazu Matsuno said.
The Arctic LNG 2 project is operated by Russia’s Novatek while Japanese trading company Mitsui & Co. and state-owned Japan Organization for Metals and Energy Security (JOGMEC) hold a combined 10 percent stake.
Mitsui and JOGMEC are set to receive a combined 2 million metric tons of liquefied natural gas (LNG) per year from the project.
The latest sanctions are part of several economic measures the US, Europe and their allies have taken against Russia in response to its invasion of Ukraine in February 2022. They include a soft price cap on Russian oil and fuel exports and restrictions on Russian access to the global banking system. -Reuters
