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China’s exports slow down and energy imports rise affects Japan’s trade

2. China_s exports slow down and energy imports rise affects Japan_s trade
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Japan noticed a trade deficit in March that was more than four times larger than market expectations, as China-bound exports slowed sharply and rising energy prices increased the cost of imports, compounding the economic challenges brought on by the Russia-Ukraine conflict.

Data showed outgoing trade was controlled by a slip in car exports and a slowdown in the growth of shipments to Japan’s greatest partner China highlighting continuing risk from global supply constraints and the COVID pandemic. The constant trade deficit highlights the vulnerability of the world’s third-largest economy to rising import costs.

“If China-bound exports are lagging, Japan’s recovery of the economy see slower progress”, said Takeshi Minami, chief economist at Norinchukin Research Institute.

The March deficit was the eighth in a row, but it was the smallest in five months.

The rapid depreciation of the yen, which has fallen to two-decade lows against the US dollar on the prospect of widening US-Japan interest rate differentials, is inflating already rising import costs for fuel and food, putting downward pressure on household spending power.

 

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