Japan: resumption of exports in October despite sluggish global demand

Japanese exports grew in October by 3.1%, while the consensus of economists polled by the Bloomberg agency expected a small growth of 1%.

Japanese exports rebounded more than expected in October according to official data published on Wednesday, suggesting a possible positive contribution of foreign trade to the GDP of the fourth largest economy in the world in the last quarter.

Japanese exports grew in October by 3.1%, while the consensus of economists surveyed by the Bloomberg agency expected a small growth of 1%, after a decline the previous month, the first in almost a year. They were particularly dynamic in the semiconductor manufacturing equipment sector (+42.6%), particularly to China, to which shipments across all sectors increased by 1.5% year-on-year.

On the other hand, they fell by 6.2% towards the United States and 7.2% towards Western Europe. “Exports continue to struggle in the face of weak global demand, intensifying foreign competition and difficulties in domestic automobile production,” said Stefan Angrick in a note from Moody’s Analytics.

“At the same time, import prices remain above pre-pandemic levels, which keeps the value of imports high,” he added. According to the Japanese Ministry of Finance, Japanese imports increased slightly by 0.4% last month, resulting in a trade deficit of 461.2 billion yen (2.8 billion euros).

The figures “give hope of a recovery in external demand during the October-December quarter,” commented Hiroshi Miyazaki of the Itochu research institute, quoted by the Bloomberg agency. But “even if exports will eventually recover, helped by the weakness of the yen, global political uncertainty limits the medium-term outlook”, however tempered Mr. Angrick, citing possible Sino-American trade tensions with the return to Donald Trump’s White House.