TOKYO (Reuters) – Japan’s exports suffered a double-digit decline for the fourth month in a row in June as the coronavirus pandemic took a heavy toll on global demand, reinforcing expectations that the economy has sunk into its deepest recession in decades.
U.S.-bound Japanese shipments nearly halved again due to plunging demand for cars and autoparts, while exports to China remained weak, pointing to the absence of a strong growth engine in the global economy.
Global demand for cars and other durable goods has sunk since March as the pandemic prompted many countries to lockdown, forcing businesses to shut and people to stay at home.
Though more countries have now started re-opening their economies, the data could diminish hopes for a quick rebound in global demand and Japan’s export-led economy, analysts say.
“Exports are likely to seesaw for the time being,” said Takeshi Minami, chief economist at Norinchukin Research Institute, citing a renewed rise in virus cases in Japan and the United States.
“If domestic and external demand remain sluggish for a prolonged period, supply capacity could be slashed, triggering a jump in bankruptcies and job losses in the latter half of this fiscal year.”
Ministry of Finance (MOF) data showed on Monday that Japan’s exports plummeted 26.2% in June from a year earlier, bigger than a 24.9% decline seen by economists in a Reuters poll. It followed a 28.3% fall in May — the worst downturn since September 2009.
The slump was aggravated by a big annual decline in U.S.-bound car exports, Japan’s main export item.
Shipments to the United States – Japan’s key market – dived 46.6%, due to 63.3% decline in shipments of automobiles, 56% drop in airplane engines and 58.3% fall in car parts.
In 2018, the United States was Japan’s largest export market, followed closely by China, and led by cars as well as motors, car parts and chip-making machinery.
Exports to China, Japan’s largest trading partner, fell 0.2% in the year to June, as declines in shipments of chip-making machinery and chemical materials more than offset increase in nonferrous metal and car shipments.
Shipments to Asia, which account for more than half of Japanese exports, declined 15.3%, and exports to the European Union fell 28.4%.
Japan slipped into recession for the first time in 4-1/2 years in the first quarter and is on course for its deepest postwar slump as the health crisis weighs heavily on businesses and consumers.
The world’s third-largest economy is forecast to contract 5.3% this fiscal year, the biggest contraction since comparable data became available in 1994, followed by a 3.3% bounce next year, a Reuters poll of over 30 economists shows.
Reflecting weak demand and declining oil prices, imports fell 14.4% in the year to June, versus the median estimate for a 16.8% decrease, leaving the trade balance in a deficit of 268.8 billion yen ($2.51 billion).
The Bank of Japan has signalled confidence the economy will emerge from the slump and has ruled out the risk of deflation, suggesting the central bank has paused monetary easing after it deployed stimulus twice so far this year.
(Reporting by Tetsushi Kajimoto; Editing by Kim Coghill & Shri Navaratnam)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
