Japan Exports Decline Again as Global Economic Outlook Darkens

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Japanese exports fell for an eighth straight month in July, weighed down by shipments of auto parts and semiconductors, as slowing economic growth and trade battles raise fears of a global recession.

The of shipments abroad dropped 1.6% in July from a year earlier, according to the finance ministry. Economists surveyed by Bloomberg had estimated a 2.3% drop. The trade balance was a deficit of 249.6 billion yen ($2.34 billion).

Key Insights

• Domestic demand has supported Japan’s trade-driven economy during this year’s export slump, but the darkening global outlook begs the question how long personal consumption and capital investment can carry the day.
• A slowdown in the global economy, especially in China, trade battles and geopolitical crises have the world economy headed for its weakest expansion since the global financial crisis. Japan’s exports to China fell 9.3% in July from a year earlier.
• “There is a risk that the continuing weakness in exports will start to drag on capital spending as companies become increasingly discouraged by the prospects for the global economy,” said Norio Miyagawa, senior economist at Mizuho Securities Co.
• Exports to South Korea fell 6.9%. A ministry official said it was unclear how Japan’s decision to strengthen controls on exports of products to South Korea that are needed to make semiconductors and computer displays affected the trade data.

What Bloomberg’s Economists Say

"Clearly, slowing global demand continues to take a toll on Japan’s economy. And with the U.S. and China locked in an escalating trade war, and global growth under pressure, weakening exports remain a concern for Japan’s growth outlook."
--Yuki Masujima, senior economist
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• Exports of auto parts fell 11%, semiconductors dropped 7.7% and chip-making equipment fell 14%, the finance ministry said.
• Imports fell 1.2% in July, versus economists’ median estimate of a 2.3% drop.
• Exports to the U.S. rose 8.4% in July from a year earlier.
• Shipments to the European Union increased 2.2%.

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