In April, China-bound shipments fell, dragging down Japan’s export growth. On Thursday, Ministry of Finance data showed that exports grew 2.6% in April from a year earlier, less than the 3.0% forecast by economists in a Reuters poll and the 4.3% gain in March. It was the smallest growth since February 2021, when exports fell 4.5%.
The world’s No. 3 economy emerged from recession in the first quarter, supported by increased consumer spending and tourism after COVID-19 pandemic restrictions were lifted. Still, sluggish exports are dragging on industry activity and slowing the recovery.
Since February 2021, exports have grown monthly, boosted by a weaker yen that makes Japanese products competitive.
On Wednesday, GDP figures for January-March showed exports fell 4.2%, the first quarterly decrease in 18 months.
“Weakening exports will put a drag on capital spending, which may sap domestic demand as consumption lacks strength,” said Norinchukin Research Institute head economist Takeshi Minami.
“The global economy will slow further in the latter half of this year, so you cannot count on either domestic or external demand, leaving Japan’s economy in a soft patch.”
Vehicle, vehicle part, and steel exports to China, Japan’s largest trading partner, fell 2.9% in April year-over-year. It was the fifth consecutive month of declines after March’s 7.7% drop. Japan’s shipments to Asia declined 6.3% in April, the fourth straight month.
As supply constraints relaxed, April U.S.- and EU-bound shipments rose 10.5% and 11.7%, respectively.
As the base effects of rising energy costs and a weakened yen faded, imports fell 2.3% in April, significantly more than the median expectation of 0.3% and the first annual decline in 27 months.
The trade deficit was 432.4 billion yen ($3.20 billion), less than the median expectation of 613.8 billion.
