Tuesday, November 24, 2020

Japan’s exports grasp amid slow recovery from COVID-19 drop-off

Japan’s exports fell too slow in September in a sign that trade damage from the coronavirus pandemic is easing, according to Finance Ministry data released on Monday.

 The report showed Japan’s exports in September declined 4.9% from the same month a year earlier, better than the nearly 15% drop in August.

The nation’s imports fell 17.2% overall, compared with 20.8% in August.

Exports to China jumped 14%, while shipments to the US inched up 0.7%, in another possible sign of a gradual rebound. By sector, computer exports to the world surged nearly 45%.

Foreign orders dropped 3.9% in June from the previous month, extending declines to a fourth straight month, but slowing from double-digit falls seen in April and May.

Total core orders slumped to 706.6 billion yen ($6.72 billion), the lowest since February 2013, forcing the government to downgrade its assessment to say machinery orders were “declining.”

Manufacturers surveyed by the government expect core orders to fall 1.9% in the current quarter after dropping 12.9% in April-June, the data showed.

A decline in July-September would mark the fifth straight quarter of falls, the longest streak of decrease since orders slid for six straight quarters during the 2008 global financial crisis.

Adding to the gloom, a survey from Tokyo Shoko Research on Tuesday showed 8.5% of small firms, or more than 300,000 companies, could go out of business if the pandemic is prolonged. Such firms employ seven out of 10 workers in Japan.

Japan’s economy suffered a record annualized contraction in April-June as the pandemic crushed demand for cars and other exports and kept consumers confined at home.

Analysts expect any rebound in the current quarter to be modest as a resurgence of infections will likely put a lid on demand both at home and abroad

Japan’s export-reliant economy has filled into recession, with three straight quarters of contraction through June, as the outbreak slammed business activity and stifled trade.

But a recovery in China, where COVID-19 emerged late last year, and recoveries in some other Asian countries are helping Japan regain momentum.

Prime Minister Yoshihide Suga, who took office a month ago, left on Monday for Vietnam and Indonesia, where virus cases are relatively low, to drum up business and trade.

His predecessor, Shinzo Abe, had tried to sustain economic growth with his “Abenomics” package of programs based on zero interest rates and curtailing deflation.

Suga, also from the governing Liberal Democratic Party, is expected to continue those policies.

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