The FINANCIAL — Japanese exports rose 7.6% on year in July, the Ministry of Finance said on August 19, as robust shipments to the U.S. offset sluggish exports to China, according to Nasdaq.
Meanwhile, imports fell 3.2% as sliding oil prices reduced the cost of purchasing gas and oil from the Middle East and Southeast Asia. The benefit of cheaper oil prices, which are down 43% on year on a dollar basis, was partly offset by a 21% decline in the yen against the dollar.
That left the world’s third-largest economy with a monthly deficit of ¥ 268.1 billion, the fourth straight month of shortfall. Economists looked for a smaller deficit of ¥ 70 billion for the month, according to a survey by The Wall Street Journal.
The value of exports to China, the second largest export destination after U.S., rose 4.2%, though in volume terms, decreased 1.3%.
Economic slowdown in China, which accounts for about a fifth of Japan’s exports and imports, have weighed on Japan’s economy in recent months.
While exports to China were sluggish in the past three years due to political tensions over disputed islands, they fell further this year as China’s economic growth decelerated.
Weaker exports to China were partly to blame for a 1.6% contraction in the Japanese economy in the second quarter of this year.
The important question for policy makers now is whether the weakness is temporary. Some economists fear that the sluggishness may persist, forcing Japanese firms to scale back their investments and causing an even sharper slowdown in the Japanese economy.