TOKYO (Reuters) – Japanese exports fell much faster than expected in February as U.S. and China-bound shipments weakened, a source of concern for the world’s third-largest economy as it tries to prop up growth.
The prospects for a U.S. recovery may ease concerns about the outlook for Japan’s economy, however, which is seen slowing in the current quarter due to new COVID curbs that have hit service-sector activity.
Ministry of Finance data out on Wednesday showed Japanese exports fell 4.5% year-on-year in February, hurt by decline in U.S.-bound shipments of automobiles.
“Japan’s export growth has probably weakened this quarter, but uptrend remains intact,” said Masaki Kuwahara, senior economist at Nomura Securities.
“The Chinese economy will resume recovery once a renewed rise in infections fades, and the vaccine rollouts and huge stimulus will give a boost to the U.S. economy, all of which should help accelerate Japan’s exports and broader economy in April-June.”
It was the first decline in three months, following a 6.4% gain in January. It was also much bigger than a 0.8% drop expected by economists in a Reuters poll.
By region, exports to China rose 3.4% in the year to February, led by chip-making equipment, nonferrous metals and plastic, slowing sharply from a 37.5% gain in the prior month due partly to the Lunar New Year holidays that fell in February.
U.S.-bound shipments, another key export market for Japanese goods, declined 14.0% year-on-year in February, dragged down by automobiles, airplane parts and motors, after a 4.8% drop in the prior month and posting a fourth straight month of declines.
Exports to Asia, which accounts for more than half of Japan’s overall shipments, fell 0.8% in the year to February, while those to European Union declined 3.3%, the data showed.
The trade data comes on the eve of the Bank of Japan’s two-day policy review at which it may phase out a numerical target for its risky asset buying, underscoring the rising cost of prolonged easing under Governor Haruhiko Kuroda’s stimulus.
It also follows the Reuters Tankan poll that found Japanese manufacturers grew more upbeat about a gradual recovery though worries about COVID impact lingered.
Imports rose 11.8% in the year to February, roughly matching the median estimate, following a 9.5% drop in the prior month and bringing a trade surplus of 217.4 billion yen ($2 billion).
Imports marked the first annual gain in 22 months due to a pick-up in domestic demand, restocking of inventory and rises in crude oil and resources prices.
($1 = 109.0300 yen)
(Reporting by Tetsushi Kajimoto; Editing by Sam Holmes)