Japan's exports fell for a fifth month, hampered by trade tensions with China and weak demand in Europe, pushing the world's third-largest economy closer to recession ahead of December elections.
Shipments fell 6.5% in October from a year earlier, leaving a trade deficit of 549 billion yen (US$6.7 billion), the Finance Ministry said in Tokyo on Wednesday. That compared with the median forecast of 25 economists for a 4.9% decline in exports. Imports were down 1.6%.
Japan will probably slide into recession this quarter on weakness in domestic consumption and falling exports, which account for about 15% of the economy. While the yen touched a seven-month low this week on speculation that opposition leader Shinzo Abe will be elected and force more central bank easing, the currency is still more than 30% higher than five years ago, hurting exporters profits.
Theres no doubt that Japan's economy is already in a recession, said Kiichi Murashima, chief economist at Citigroup Inc. in Tokyo. Exports will probably continue to decline this quarter.
Shipments to China, Japans largest export market, fell 11.6% as a territorial spat over islands in the East China Sea takes its toll on the $340 billion trade relationship between Asias two biggest economies. Exports to the US were up 3.1%.
Japan's economy shrank an annualised 3.5% in the July-through-September quarter and may contract a further 0.4% in the final three months of this year for the third technical recession since 2008, a Bloomberg News survey of economists shows. Japanese recessions are officially defined by a government-charged panel that considers data beyond figures for gross domestic product.
Motor vehicle exports to China fell 82% on year, the largest monthly drop since October 2011, the finance ministry said. Toyota Motor Corp, Asia's largest automaker, said October deliveries in China declined 44% from a year earlier, following a 49% drop in September. Nissan Motor Co cut its full-year profit forecast by 20% after weaker sales in China, the company's largest market.
The government last week reduced its economic assessment for a fourth straight month, the longest streak since the 2009 global recession. Data earlier this month showed machinery orders and domestic factory capacity use falling for a second month in September. Retail sales in September rose less than expected as the expiry of government subsidies for car purchases sapped consumer demand.