IHS Markit revised up its forecast of Japan’ real GDP growth to a contraction of 4.9 percent in 2020 before a rise of 1.8 percent in 2021, reflecting today’ government revision for the first quarter of 2020 and the government’ second economic package announced on May 27 - Photo by Japan' Government Office

JAKARTA (TheInsiderStories)Japan‘ exports recorded JPY6.36 trillion (US$58.61 billion) in September 2019, dropped 5.2 percent compared to the same period in the previous year, dragged down by auto parts and semiconductor production equipment, quoted from Japan’ Custom Office on Monday (10/21).

In terms of destination countries, Japan’ exports have declined to almost all countries. The sharpest decline in exports occurred in the United States (US) by 7.9 percent.

To the Asian countries down 7.8 percent, including in South Korea which lowered 15.9 percent, to Thailand 14.4 percent and to China by 6.7 percent. Japan‘ exports have only increased to a few countries, one of which to the Middle East by 8.5 percent.

The decline did not only occur in terms of exports, Japanese imports also recorded a decrease of 1.5 percent. The highest decrease occurred in mineral fuels and raw materials.  Based on the country of origin, imports declined the most from the Middle East region.

The deficit remained for the seventh consecutive month but narrowed by 16.7 percent from the previous month to JPY97.2 billion on a seasonally adjusted basis. The deficit reflected a faster decline in exports (down 5.2 percent in annual basis) than imports (down 1.5 percent year on year).

Reflecting weaker-than-expected September results, IHS Markit estimates export volumes to drop 1.0 percent quarter to quarter (QoQ) in the third quarter of 2019 and import volumes to rise 1.7 percent QoQ. The Rugby World Cup may have mitigated negative effects to service income from lower number of visitors from China and South Korea and lower spending by tourists.

However, net exports are likely to give a negative contribution of 0.2 percentage points to real GDP growth in the third quarter of 2019, a milder than that in the second quarter. The increase in exports and imports of semiconductors, said the analysts, signals a recovery in the tech cycle, an initial agreement in trade talks between the US and China also eased the risk of erosion in Japan’s exports.

That said, repercussions from the largest economy’ trade tensions are likely to persist, and weak investment and consumer spending of the two major trading partners of Japan – could continue to weigh on exports of ordinary machinery and autos, Japan’s major export products.

Earlier, Japan also made a deal with US that will cut tariffs on agricultural and industrial products as well as provide rules for digital trade while further staving off the threat of higher US car duties.

President Donald Trump said the first-phase deal would open up Japanese markets to some $7 billion worth of US products annually, cutting Japanese tariffs on American beef, pork wheat, and cheese. While, Japanese Prime Minister Shinzo Abe, said he had received reassurance from Trump that the US would not impose previously threatened “Section 232” national security tariffs on Japanese car imports.

Japan agreed to cut or eliminate tariffs on beef, pork and other commodities on a level similar to what Tokyo agreed to in the Trans-Pacific Partnership – a trade deal that the president withdrew from during his early days in office. The deal could provide some badly needed relief to US farmers who have been hit hard by Trump’s trade fight with China.

US Trade Representative Robert Lighthizer said, that the two countries would tackle cars in a later round of negotiations expected to start next April. Autos are the biggest source of the $67 billion’ US trade deal, and Trump has frequently complained that US automakers do not enjoy equal access to Japan’ market.

US$1: JPY108.52

Written by Staff Editor, Email: theinsiderstories@gmail.com