In September, Japan’s exports dipped for the first time in 10 months according to data released on Thursday, a huge concern for policymakers as any prolonged downturn in global demand could complicate the central bank’s plan to exit years of ultra-easy monetary policy.
A combination of Chinese market demand cooling down, U.S. slow growth, and stronger yen due to the Bank of Japan surprise rate hike in late July, has contributed to the decline in Japan’s exports.
September’s total exports fell 1.7% from the previous year according to the Ministry of Finance’s number, undershooting an average market estimate for a 0.5% increase and following August revision of a 5.5% rise.
Export to Japan’s biggest trading partner, China, shrunk down to 7.3% in September from last year, while in the U.S. the number went down 2.4%. Weakened demand for automobiles drove exports to both countries down.
Even Though the strengthening of the yen does play a part in driving exports down, the BOJ has affirmed that it will not affect any future rate decision.
Meanwhile, September’s imports grew 2.1% from a year earlier, compared to market expectations of a 3.2% increase. These numbers make Japan run into a trade deficit of JPY 294.3 billion ($1.97 billion) for September, as opposed to the forecast of JPY 237.6 billion.
While the BOJ is likely to keep the rate steady at its October 30-31 meeting, its forecast will remain on keeping the inflation around its 2% target through March 2027.
