Japan's Exports Increase After Three Consecutive Months of Decline

19 Oct, 2023

Japan's Exports Increase After Three Consecutive Months of Decline

Japan's export figures for September have signaled a positive turn after three consecutive months of decline, reflecting resilience in overseas markets. However, the outlook for the world's third-largest economy is cast under a shadow due to the escalating conflict in the Middle East and a slowdown in China.

Data released by the Ministry of Finance (MOF) revealed a growth of 4.3% in exports for September compared to the same period last year. This figure surpassed expectations, as economists in a Reuters poll had anticipated a more modest 3.1% increase. Notably, this rebound follows a 0.8% fall in exports observed in August.

The notable drivers of this export growth were shipments of automobiles, which account for a significant 18% of Japan's total exports. This upswing effectively offset the declines experienced in the export of chip-related products. However, there were significant challenges in the export of food to China, Japan's largest trading partner, as it experienced a sharp 58% year-on-year decline in September. This downturn can be attributed to China's ban on Japanese food imports, driven by concerns related to the release of water from the Fukushima nuclear power plant.

Exports to China, including various products such as chips, electronic parts, food, and electronic circuits, faced a 6.2% year-on-year decline in September. This marked the 10th consecutive month of export decline, primarily due to weakened demand in these sectors. In contrast, exports to the United States increased by 13% year-on-year, driven by the demand for hybrid vehicles, mining and construction machinery, and motors.

While Japan's export performance showed signs of resilience, the global economic landscape remains uncertain. The Middle East conflict and the ongoing Chinese economic slowdown pose significant challenges to Japan's economic prospects. China's economy experienced a faster-than-expected growth in the third quarter, while consumption and industrial activity in September exceeded expectations. These trends suggest that recent policy measures are contributing to a potential recovery.

On the other side of the trade equation, Japan's imports saw a substantial decline of 16.3% in the year up to September, surpassing the median estimate of a 12.9% decrease. These import figures reflect various dynamics at play in the global trade arena.