Japan posts trade deficit for third straight month

Marco Green
October 21, 2019

Exports in September slumped 5.2 percent from a year earlier, Japan's finance ministry data showed on Monday, dragged down by slowing sales of auto and aeroplane parts to the USA and semiconductor production equipment to South Korea, with which Japan is embroiled in a trade dispute.

The trade deficit came to 122.98 billion yen ($1.13 billion), following a revised 143.53 billion yen deficit in August, according to a preliminary report by the Finance Ministry.

Imports were also down 1.0 percent to 1.62 trillion yen, leaving Japan with a deficit of 441.07 billion yen against its biggest trading partner.

Japan's exports contracted for a 10th straight month in September, raising speculation the central bank could ease monetary policy as soon as next week to counter heightening overseas risks and a slowdown in demand.

Exports to the US dropped almost 8% from a year earlier while imports from the USA declined 12%. Imports from the USA declined 12%.

For the first half of fiscal 2019, Japan's goods trade recorded a deficit of 847.99 billion yen, marking the second consecutive half-year period of red ink.

But there were signs of improvement in demand for semiconductors, suggesting a slump in the sector may be bottoming out, economists said.

Exports of semiconductors rose 4% from a year earlier despite double-digit drops in most other categories of electrical machinery. Exports of integrated circuits jumped 9.1%, the data showed.

The trade deficit reflects the ongoing trade deficit with Asia as well as the increase in that with the USA, said Harumi Taguchi, economist with HIS Markit.

The tariff war between the USA and China has taken a toll across the region, hurting manufacturers within extended supply chains.

The fall was larger than a four percent drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.

Japan's exports to South Korea sank almost 11% from a year earlier in April-September and 16% in September.

He is forecasting that Japan's exports will decline 1.5% year-on-year this year and 2.7% in 2020.

Other reports by Click Lancashire

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