Japan’s Exports Fall More Than Forecast in December

Yuko Takeo, Bloomberg News

Containers sit next to gantry cranes as the sun sets at a shipping terminal at dusk in Yokohama, Japan, on Saturday, Aug. 17, 2019. 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. Photographer: Toru Hanai/Bloomberg , Bloomberg

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Japanese exports dropped more than expected in December, with the shipments slump dragging on for a 13th month despite recent signs of green shoots in global manufacturing.

The value of shipments overseas fell 6.3% from a year earlier, extending the longest stretch of monthly drops since 2016, Ministry of Finance data showed Thursday. Economists had forecast a 4.3% decline.

Key Insights

The ongoing drop in overseas shipments adds to headwinds facing a Japanese economy forecast to have shrunk 3.7% in the fourth quarter as domestic factors, including typhoon damage and a hike in the sales tax, hit growth.
A trade agreement signed this month between the U.S.-and China, Japan’s biggest export markets, should brighten the outlook for shipments in 2020, although tensions could flare up again.
Also positive for Japan’s trade outlook are recent reports from nearby South Korea suggesting the worst may be over for global tech. Industry bellwether Samsung Electronics beat earnings estimates on better chip prices and the country’s semiconductor exports are headed for the first monthly gain since 2018.
In the short-term, there’s also less onus now on Japan’s exports to support growth since the Abe administration last month unveiled $120 billion in economic stimulus measures. The package was a big reason the Bank of Japan this week raised its growth forecast for the coming fiscal year, even as it said overseas risks still need careful monitoring.

What Bloomberg’s Economist Says

“Looking ahead, signs of stabilization in China’s economy suggest some reprieve for Japan’s exports, though the outlook remains weak. Net exports -- which feed into the GDP growth calculation -- could drag on growth in 1Q, reflecting a rise in imports.”

--Yuki Masujima, economist

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Imports slid 4.9% in December, compared with economists’ median estimate for a 3.2% drop.
The trade balance was a 152.5 billion yen deficit, roughly in line with analysts’ forecasts.
Exports to the U.S. dropped 14.9%, while shipments to China edged up 0.8%.
Shipments of semi-conductor-making equipment rose 25.8% in value terms, much better than the average double-digit declines of April-September. It also rose in volume terms by 43.6%. Chip exports increased by 2.6%.

(Adds import data and regional breakdown.)

To contact the reporter on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jason Clenfield