Japan's exports crashed to their lowest level in three years in October due to plummeting shipments of cars and aircraft engines to the United States and plastics to China on account of the global slowdown. The United States' trade war against the world also weakened demand.
Analysts said the disappointing October trade results now threaten to plunge Japan into an economic recession unless the country pulls off a miracle in the next few quarters. The government of prime minister Abe Shinzo is now urgently cobbling together a stimulus package to pre-empt the looming recession while mitigating more serious overseas risk.
Data released Wednesday by the Ministry of Finance reveal Japan's exports plunging a huge 9.2% year-on-year in October, a far larger decline than the 7.6% reduction expected by economists in a Reuters poll. In volume terms, October exports slid 4.4% year-on-year, the third straight month of weakness.
The disheartening results extend the longest run of export shortfalls since a 14-month stretch from October 2015 to November 2016.
Exports to China, Japan's biggest trading partner, sank 10.3% year-on-year in October, down for the eighth month as shipments of plastics and car parts fell. Japanese exports to Asia, which account for more than half of Japan's overall exports, tumbled 11.2% year-on-year in October, down for the 12th month.
Exports to the United States dropped 11.4% year-on-year hurt by reduced shipments of cars, aircraft engines and car parts. Imports from the U.S. fell 17% year-on-year.
Japan's total imports for October skidded 14.8% year-on-year, a smaller decline than the median estimate for a 16.0% decrease and an indication of weak domestic demand.
Japan posted an October trade surplus of only $160 million (17.3 billion yen) compared to a $2.8 billion (301.0 billion yen) surplus predicted by economists. October total imports amounted to $60.5 billion (6.56 trillion yen) while exports came to $60.6 billion (6.58 trillion yen).
Analysts predict weak global demand suggests export volumes will slide further in 2020. Tom Learmouth of Capital Economics forecast a 2.7% drop in exports in 2020 after a 2% slide this year.
