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Thursday, March 30, 2023

As COVID-19 hits the supply chain, Japan’s hot export growth slows

Tokyo-Driven by strong shipments of chip manufacturing equipment, Japan’s exports continued double-digit growth in August, although the growth rate has slowed as COVID-19 hits major Asian supply chains and slows factory production. .

Trade growth is unlikely to eliminate concerns about Japan’s economic prospects, which has not yet returned to pre-pandemic levels after being hit hard by the global trade collapse in the first quarter of 2020.

The Ministry of Finance said on Thursday that exports in August increased by 26.2% year-on-year, achieving double-digit growth for the sixth consecutive month, as strong demand for chip manufacturing equipment offset the slowdown in exports from the United States and the European Union.

However, the growth was lower than the 34.0% expected by economists in a Reuters survey and the 37.0% increase last month.

“Exports have been driving the economy. If Japan’s economy does not grow, its recovery prospects may become unstable,” said Takumi Tsunoda, a senior economist at Shinkin Central Bank.

Policymakers are under pressure to keep the fragile recovery intact. The resurgence of pandemics in other parts of Asia has led to the introduction of lockdown measures in manufacturing centers such as Vietnam and Malaysia, which has put economic recovery into question.

“Semiconductor issues have had a considerable impact and put a lot of pressure on car exports,” said Nan Wu, chief economist of the China Financial Research Institute of Agriculture and Forestry.

“I think that as the bottleneck in the supply of parts and components in Southeast Asia continues, it may affect exports at least before the end of the year.”

Toyota Motor Corp. last week cut its annual production target by 300,000 vehicles, as the increase in COVID-19 infections has slowed the production of parts factories in Vietnam and Malaysia.

A Reuters survey on Tuesday showed that although vaccination rates are increasing and daily COVID-19 infections seem to have peaked, analysts expect Japan’s annual growth rate for the quarter to be 1.2%, much lower than last month’s expected.

According to the data, by destination, shipments to China, Japan’s largest trading partner, increased by 12.6% year-on-year in August, with chemicals and semiconductor parts leading the increase.

As strong demand for power generation equipment offset the decline in car shipments, exports to the world’s largest economy, the United States, soared by 22.8%.

Shipments to Asia increased by 26.1% as a whole, the lowest growth rate in five months, while shipments to the EU increased by 29.9% in August.

Due to strong demand for fuel and medical supplies, imports in August increased by 44.7% year-on-year, while the median estimate was a 40.0% increase.

This resulted in a trade deficit of 635.4 billion yen ($5.81 billion), which is the largest deficit since December 2012 and also higher than the estimated median deficit of 47.7 billion yen.

The trade data was released after a Reuters Tankan survey on Wednesday, which found that the confidence of Japanese manufacturers fell to a five-month low in September as the latest wave of COVID-19 forced factories across Asia to shut down.

(1 USD = 109.4200 Japanese Yen)

Daniel Leussink and Kantaro Komiya


This News Originally From – The Epoch Times

World Nation News Desk
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