Japan’s exports slumped the most in nearly four years in March as US-bound shipments, including cars, fell at the fastest rate since 2011, highlighting the damage the coronavirus pandemic has inflicted on global trade.
Monday’s bleak data underscored the challenges Prime Minister Shinzo Abe’s government faces in dealing with a collapse in activity that is expected to send the global economy into its deepest slump since the Great Depression of the 1930s.
After a jump in virus cases, Abe expanded a state of emergency last week to include the entire country, which gave authorities more power to push people to stay home and businesses to close. Japan has reported more than 10,000 infections and over 200 deaths.
Adding to worries the world’s third-largest economy is sliding into recession, Ministry of Finance data showed Japanese exports fell 11.7 per cent in the year to March, compared with a 10.1 per cent decrease expected by economists in a Reuters poll.
That followed a 1 per cent fall in February and marked the biggest decline since July 2016, as shipments to Japan’s major export destinations from China, the United States to Europe were all battered.
“The impact is likely to continue in April and onwards, which will prevent economic activity from normalizing,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “That will keep trade volume constricted globally.”
Imports fell 5.0 per cent in the year to March, versus the median estimate for a 9.8% decline, after the prior month’s 13.9 per cent drop, bringing the trade balance to a surplus of 4.9 billion yen ($45.47 million).
By region, exports to China, Japan’s largest trading partner, fell 8.7 per cent in the year to March, reflecting a slump in items such as car parts, organic compounds and chip-making machinery.
China’s economy shrank for the first time on record in the first quarter as the virus hit production and spending hard.
But while China is restarting its economic engines after bringing the outbreak under control, demand has plunged in many other countries after they imposed lockdowns to contain the pandemic.
US-bound shipments, another key market for Japanese goods such as cars and electronics, fell 16.5 per cent year-on-year in March, the biggest decline since April 2011, weighed by drops in demand for cars, airplane motors and construction and mining machinery.
Shipments to Asia, which account for more than half of Japanese exports, declined 9.4 per cent, and exports to the European Union fell 11.1 per cent, due to the globally spreading new virus.
The global economy is expected to shrink 3.0 per cent in 2020 in a collapse of activity that would mark the steepest downturn since the 1930s, the International Monetary Fund said last week.
The pandemic has now infected more than 2.33 million and killed about 160,000 people globally.
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