Business & Economy

Japan suffers $2.5 billion trade deficit amid double-digit export decline

Tokyo, July 20 (efe-epa).- Japan has recorded a trade deficit of 268.8 billion ($2.5 billion) in June with its exports clocking a double-digit decrease for the fourth month in a row, the government data showed on Monday, reinforcing fears that the economy has plunged into one of the worst recessions in decades amid the coronavirus pandemic.

The deficit is lower than May figures of 838.2 billion yen, according to the data by the Ministry of Finance.

The data also showed that Japanese exports have fallen 26.2 percent year-on-year to 4.86 trillion yen in June, while imports decreased 14.4 percent to 5.13 trillion yen.

With China, its largest trading partner, Japan has recorded a trade deficit of 146,259 million yen, which is 10.3 percent more obtained a year ago.

Shipments to the United States, Japan’s second-largest trading partner, have almost halved mainly due to a dip in demands for cars and automobile parts. However, Japan has recorded a surplus of 124.6 billion yen with the US, which is a whopping 81.4 percent year-on-year less.

The exports to the US in June were 46.6 percent less as shipments of automobiles from the world’s second-largest exporter of autos decreased to 63.3 percent amid a 56 percent drop in airplane engines and over 58.3 percent decline in car parts.

The weakening of exports to the world’s two top economies is an indication of a missing growth engine for the recovery of the global economy.

Shipments to the European Union, its third-largest trading partner, declined by 28.4 percent as compared to figures of June 2019.

Shipments to Asia, which account for more than half of Japanese exports, declined 15.3 percent.

Japan’s GDP had also posted a contraction of 1.9 percent between October and December last year from the previous quarter. Two consecutive quarters of economic decline confirms that Japan has fallen into recession for the first time since 2015.

Japan has already slipped into recession amid fears that the third-largest economy may be headed toward its deepest postwar slump amid health crisis triggered by the global coronavirus outbreak.

The impact of the pandemic in the first quarter of this year was as reflected in the negative GDP development between January and March that came on the heels of an increase in Japan’s consumption tax rate in October, which also led to a contraction of the Japanese economy.

Comparing the first quarter of 2020 with the same period last year, the indicator released in June put the trend growth at 0.0 percent, compared to a 0.1 percent decline in the first estimate of the data published by the government on May 18.

Following the release of the first data on GDP growth in the first quarter of this year, analysts had already indicated that the decline recorded was lower than expected although they anticipate the impact of Covid-19 to be more noticeable in the second quarter of the year. EFE-EPA


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