Japan’s export growth continues to slow and there are now fears that it could fall under the level of a year ago, adding to the pressure on the economy.
While Japan enjoyed a sharp rise in third quarter growth, that was due to government stimulus measures and tax changes on cigarettes, not the underlying strength of production and exports.
Business investment was OK, but it’s looking a bit out of place as exports slow, especially into Asia.
Growth rose an annual 3.9% in the third quarter thanks to the boost from consumer spending, especially on cars, appliances and cigarettes.
But industrial production has fallen for four months as car makers scale back output as demand slows following the ending of stimulus measures that boosted demand.
In fact figures out this week confirm that Asia is slowing: Malaysia and Thailand both reported a slowdown in growth in the third quarter, joining China.
China’s growth slowed to an annual 9.6% rate in the September quarter from almost 12% in the first.
The Thai economy grew an annual 6.7% in the three months to September, down from the 9.2% annual rate in the second quarter, while Malaysia saw growth slow to an annual 5.3% rate in the three months to September, from 8.9% in June.
So far the slowdown isn’t huge, but it’s a sign that the boom in the region that helped pull the global economy out of the mire in 2009, is close to running its course.
For Japan, that’s especially important.
While exports to its previous two biggest destinations before the GFC, the US and Europe, have not recovered to pre-crisis levels, shipments into Asia have, and have surpassed them, especially China.
But now they are slowing, dragging the country’s overall export performance lower.
So much so that more and more analysts are forecasting negative growth this quarter for the economy.
Japan remains our second biggest market and it’s our second largest trading partner, so the health of the economy is important to Australia.
Figures out yesterday showed that exports rose by a slower-than-expected 7.8% in October from a year ago, down on forecasts for a 10.3% rise.
It was the slowest export growth since November last year, which saw a 6.3% fall before shipments rebounded the following month.
The October exports growth rate was half the 14.3% rise in September, 15.5% rise in August and more than 45% in February.
Japan’s exports to the EU nations fell 1.9%, the first fall in 11 months, while imports from Europe rose 1.9%.
US-bound shipments rose by a modest 4.7%, a 10 month low.
The growth of Asian demand was also waning, but China maintained a solid appetite for Japanese products.
Japan’s exports to Asia rose 11.3% in October, marking the 12th consecutive month of year on year gains, but that was down on the 14.3% rise in September and the peak 68.3% jump last January.
But China-bound exports grew 17.5%, up from a 10.2% rise in previous month, while imports from China rose 9.8%.
But analysts warn of a looming payback in the fourth quarter without such one-off factors, amid doubts over the impact fresh stimulus measures planned by the government will have as firms aggressively cut costs to secure profits.
The country’s exports for the month reached 5.72 trillion yen ($US68.5 billion), the 11th straight monthly increase, led by cars and engines.
Imports also rose 8.7% to 4.90 trillion yen, driven by demand for iron ore, coal and liquid natural gas.
Japan’s trade surplus grew 2.7% in October from a year earlier to Y821.9 billion ($US9.9 billion), slowing notably from the revised 52.8% growth posted in September, according to the Ministry of Finance release yesterday.
On a seasonally adjusted basis, Japan’s trade surplus posted a surplus of Y578.5 billion in October, down 5.4% from the previous month following a 3% m/m rise in September.
Seasonally adjusted exports were unchanged in October from September after having posted the fifth straight month-on-month drop until September, while imports rose 0.7%, the first increase in five months.
