Japan’s exports fell for the first time in 10 months, a matter of concern for policymakers

Tokyo: According to statistics released on Thursday, October 17, Japan’s exports decreased in September for the first time in ten months. This is concerning for policymakers since a sustained decline in global demand might make it more difficult for the central bank to end years of very loose monetary policy.

Exports were hurt by soft demand in China and the sluggish US economy, and their value was further depreciated by the yen’s recent rally, which was partly caused by the Bank of Japan’s surprise rate increase in late July.

According to economist Kazuma Kishikawa of the Daiwa Institute of Research, “it’s possible that exports will continue to struggle in the coming months in light of uncertainties, particularly in the Chinese economy.”

He continued, saying that the country’s stimulus plans are taking time to take effect and that domestic demand in China seems to be weaker than anticipated.

According to Ministry of Finance figures, total exports fell 1.7% in September compared to the same month last year. This was in contrast to a corrected 5.5% growth in August and missed a median market estimate of a 0.5% increase.

According to statistics, Japan’s largest trade partner, China, had a 7.3% decline in exports in September compared to the same month last year, while the US saw a 2.4% decline. The weak demand for automobiles was the main cause of both nations’ export decreases.

Kishikawa said, “The latest data serves as a reminder for the BOJ that a sharp rise in the yen can drag exports,” while he also noted that relatively minor falls like the one in September are unlikely to have an impact on the BOJ’s future rate choices.

Compared to market expectations of a 3.2% growth, imports increased by 2.1% in September from a year earlier.

Consequently, Japan’s trade deficit for September was ¥294.3 billion (US$1.97 billion) as opposed to the projected deficit of ¥237.6 billion.

In his most recentdovish remark, BOJ Governor Kazuo Ueda emphasized external issues, including US economic uncertainty, and stressed that policymakers can afford to take their time examining these risks when determining whether to raise interest rates.

According to those familiar with its thinking, the BOJ will essentially retain its prediction for inflation to remain around its 2 percent goal through March 2027, even though it is anticipated to hold interest rates unchanged at its meeting on October 30-31.

However, a quarterly poll by the central bank revealed that businesses are still planning to spend heavily and that manufacturers are not yet completely feeling the effects of the weakening global economy.