Japan June exports underwhelm, global weakness drags on economy

TOKYO  – Japan’s annual exports grew much-less than expected in June, highlighting weak global demand that continues to undercut the post-COVID recovery in the world’s third-biggest economy.

The risk of a world recession amid sweeping monetary policy tightening since last year has cast a pall over export-led economies, with many countries including Japan relying on domestic consumption to underpin growth.

The trade data, released by the Ministry of Finance (MOF) on Thursday, showed exports rose 1.5 percent year-on-year last month, below the 2.3-percent gain expected by 15 economists in a Reuters poll, but faster than a 0.6-percent rise in May.

Exports were led by U.S. bound shipments of cars and mining machinery.

Imports fell 12.9 percent year-on-year in June, versus the median estimate for a 11.2-percent decrease. The decline in the value of imports, caused by drops in crude, coal and liquefied natural gas, should help ease concerns about rising costs of purchases.

The overall trade numbers produced a trade surplus of 43 billion yen ($308.11 million), confounding the median estimate for a 90.1 billion yen deficit.

A weak yen and surging import costs have led to several months of trade deficits in Japan, another challenge for policymakers hoping to shore up a fragile recovery following the end of COVID curbs.

By region, exports to China, Japan’s largest trading partner, fell 11 percent year-on-year last month, due to drops in shipments of steel, chips and nonferrous metal, following a 3.4-percent decline in May.

U.S.-bound shipments, Japan’s major ally, rose 11.7 percent year-on-year in June, led by shipments of cars and construction and mining machinery, following a 9.4- percent rise in the previous month.

($1 = 139.5600 yen)