TOKYO- Japan’s exports in August were expected to have suffered a double-digit contraction for the sixth straight month, a Reuters poll showed, underlining the sweeping impact of the coronavirus crisis on global demand and growth.
The poll also found consumer prices slumped to its lowest in more than three years, highlighting deflation risks and the challenge facing Japan’s next leader in engineering a broad revival.
Chief Cabinet Secretary Yoshihide Suga is on course to succeed incumbent Prime Minister Shinzo Abe, who is stepping down for health reasons.
Exports were expected to have fallen 16.1 percent in August from a year earlier, with the decline easing slightly from a 19.2 percent drop in July, the poll of 16 economists showed.
The poll also forecast an 18 percent year-on-year decline in imports after a 22.3 percent drop in July, with a trade deficit of 37.5 trillion yen ($353.21 billion)
“Worsening corporate earnings and uncertainty over the outlook likely dragged down shipments of capital goods, which weighed on the total exports,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
Japan is grappling with its worst postwar recession, and expectations are that any recovery will be modest as businesses face tough global conditions in light of the still-rising coronavirus cases worldwide. Consumers also remain wary about the outlook.
The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is forecast to have declined 0.4 percent in August from a year earlier, the biggest drop since late 2016.
The key driver in the core CPI downturn was a price decline in accommodations after the government excluded people living or vacationing in Tokyo from a subsidized domestic tourism campaign.
“There was a resurgence in the coronavirus cases in some areas,” said Takeshi Minami, chief economist at Norinchukin Research Institute, adding that many people cutback on spending on tourism and other services.
The government will publish CPI data at 8:30 a.m. on Friday.
The poll also showed the Bank of Japan would keep its policy interest rate at minus 0.1 percent, and the 10-year Japanese government bond yield target at around 0 percent when it holds a policy meeting on September 16-17. The BOJ has eased policy twice this year to cushion the coronavirus-stricken economy. – Reuters