–Japan Posts 17th Straight Month of Trade Deficit on Oil, Gas Import Costs
–Exports to US Remain High After Hitting Record High in October
–Exports to China Mark 1st Y/Y Drop in 7 Months Amid Renewed Covid Spike in China
By Max Sato
(MaceNews) – Growth in Japanese export values lost more steam in December on slowing global demand as China struggles with a renewed spike in Covid infections and deaths, while lower energy markets and the yen’s slight rebound also reduced import values, leading to a narrower trade deficit, data released Thursday by the Ministry of Finance showed.
Shipments to China, the key export market for Japanese goods, posted their first year-over-year decline in seven months in December as the world’s second-largest economy has been hit by the resurgence of the pandemic since Beijing lifted its strict zero-Covid public health rules last month. Demand from China had picked up from the negative impact of a two-month Covid lockdown of the port city of Shanghai that ended at the end of May.
The key points from the MOF’s Trade Statistics:
* Export values rose 11.5% on the year in December for the 22nd straight rise after rising 20.0% in November and 25.3% in October to a fresh record high of ¥9.0 trillion in October. The pace of growth exceeded the median forecast of a 9.6% gain. Amid slowing global economic growth, export volumes fell 7.1% on the year for the ninth drop in 12 months after falling 3.6% in November, edging down 0.3% in October, and rising 7.3% in September.
* The increase in December export values was led by the recent pickup in automobile shipments, thanks to easing global supply constraints, and solid demand construction and mining equipment, as seen in the prior month.
* Import values rose 20.6% on the year in December, also slowing from increases of 30.3% in November and 53.5% to ¥11.17 trillion in October, which was a record high amount for the eighth consecutive month. It was the 23rd straight increase and in line with the median forecast of a 20.6% rise. Import volumes dipped 6.4% in December after slipping 4.6% in November and rebounding 5.6% in October and falling 1.7% in September.
* The increase in import values was led by higher prices for coal, crude oil and natural gas, compared to year-earlier levels, as seen in recent months. Japan is also importing drugs from the U.S. and Europe to cope with rising Covid infections and deaths.
* The trade balance came to a deficit of ¥1.448 trillion (¥1,448.5 billion) in December. It marked the 17th straight month of a shortfall after posting a revised deficit of ¥2.029 trillion in November and a record shortfall of ¥2.820 trillion in August. It compares to a deficit of ¥603.09 billion in December 2021. The gap was wider than the consensus forecast of a ¥1.653 trillion (¥1,652.8 billion).
* For the whole of calendar 2022, Japanese exports rose 18.2% on the year to a record high of ¥98.19 trillion for the second straight rise after a 21.5% gain in 2021, led by solid demand for automobiles, mineral fuels and iron and steel, while imports surged 39.2% to ¥118.16 trillion, also the highest on record, on the back of high costs of imported oil and gas, marking the second rise in a row after a 24.8% rise in 2021. The result was a record high annual trade deficit of ¥19.97 trillion following a deficit of ¥1.78 trillion in 2021 and a small ¥388.29 billion surplus in 2020.
* Both export and import volumes declined for the first time in two years in 2022, reflecting shrinking global trade following aggressive credit tightening by many central banks and heighted geopolitical risks.
* Exports to China, one of the top export destinations for Japanese goods, posted the first drop in seven months in December, down 6.2% from a year earlier, after increases of 3.5% in November and 7.7% in October, 17.1% in September, 13.4% in August and 12.8% to a record high ¥1.78 trillion in July. The decrease was led by automobiles, auto parts and semiconductor-producing equipment, as seen in the previous month. Demand for audio and visual equipment remained strong.
* Japanese exports to Asia as whole marked the 22nd straight year-on-year rise, up 4.1% in December, but the pace of growth continued decelerating from 11.6% in November, 16.6% in October and 20.6% in September. The increase was led by shipments of mineral fuels, audio and visual equipment and chip-making equipment.
* Exports to the U.S., which have exceeded exports to China since October, recorded the 15th straight year-on-year rise, climbing 16.9% to the second highest amount on record. The pace of increase slowed from 32.6% in November and 36.6% to a record high of ¥1.78 trillion in October. The increase was led by automobiles, construction and mining equipment and engines, as largely seen in recent months.
* Shipments to the European Union posted the 22nd straight year-on-year increase in December, up 27.0%, following a 32.0% rise the previous month, led by automobiles, motorcycles and iron and steel, as seen in November.