Lower costs for imports of oil and gas have reduced Japan’s trade deficit in recent months, and the deficit in July was 72 percent lower than in the same month a year earlier.
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The 7.6 per cent annual increase in exports in July was bigger than the median estimate for 5.5 per cent annual growth expected by economists in a Reuters poll, but still slower than June’s robust 9.5 per cent year-on-year rise.
The value of imports slid 3.2 percent to 6,931.8 billion yen, down for the seventh straight month, reflecting falling imports of crude oil and other energy-related products such as liquefied natural gas from the Middle East.
Imports fell 3.2 percent last month as weak commodity prices helped bring down the country’s energy bill, which soared after it had to replace nuclear power with pricey fossil fuels in the aftermath of the Fukushima nuclear crisis.
Demand in Europe contributed most to the gain, with exports volume rising 2.1%. “China is dragging down exports”.
Asian exporters are all seeing a weakening in exports, accentuated by slowing Chinese demand, Mizuho Bank noted in a research note. Exports to the US gained 0.7%, while those to China and the rest of Asia weakened by 0.6% and 0.9% respectively.
Roughly 60% of economic activity is what makes up private consumption that knocked down to 0.8% from the previous quarter, double the pace as expected by analysts.
Thanks to the shift of manufacturing offshore over the past two decades, the weaker Japanese currency has done little to push exports significantly higher, despite the huge windfalls for Japanese manufacturers when they change dollar-based profits back into yen.
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Voices are now growing within the government to use the same tactic for next year’s wage negotiations, the sources said, after data this week showed the economy shrank in the second quarter as exports slumped and consumers cut back spending.
