(Bloomberg) -- Japanese exports fell for an eighth straight month in July, as slowing growth and trade battles raise fears of a global recession.

The value 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.

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.
• In addition to suffering the effects of the U.S.-China trade war, Japan is battling South Korea on another trade front, while trying to avoid auto tariffs in its trade talks with the U.S.
• All those risk factors and others have pushed the yen, seen as a haven currency, to near the strongest level this year, making Japanese exports less competitive.

What Bloomberg’s Economists Say

"Looking ahead, the recent strength in the yen and slowing Asian demand are likely to weigh on exports. Another risk is that Japan’s auto sector becomes a target of U.S. protectionism."--The Asia Economist TeamClick here to read more

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• Imports fell 1.2% in July, versus economists’ median estimate of a 2.3% drop.
• Exports to China fell 9.3% in July, while shipments to the U.S. rose 8.4%.
• Shipments to Europe increased 2.2%.

--With assistance from Tomoko Sato and Toru Fujioka.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Henry Hoenig, Jiyeun Lee

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