Japan’s hot exports growth cools as COVID-19 hits supply chains

• Export growth in August weaker than expected
• Foreign demand underscores export-driven recovery
• Longer-lasting effects of COVID-19 are hurting trade prospects

TOKYO, Sep 16 (Reuters) – Japan’s exports rose double-digit growth in August, led by strong shipments from chip manufacturing equipment, although the pace of growth slowed as COVID-19 hit key Asian supply chains and slowed factory production.

Trade growth is unlikely to allay worries about the outlook for the Japanese economy, which has not yet recovered to pre-pandemic levels following the massive slump in world trade in the first quarter of 2020.

Exports rose 26.2% in August compared to the same month last year, the Treasury Department announced on Thursday, marking the sixth straight month of double-digit growth as strong demand for chip manufacturing equipment slowed shipments to the United States and the United States the European Union could make up for cars.

However, growth was slower than the 34.0% expected by economists in a Reuters poll and the 37.0% increase in the previous month.

“Exports have driven the economy. The recovery scenario for Japan’s economy could falter if it does not grow,” said Takumi Tsunoda, chief economist at Shinkin Central Bank.

Policymakers are under pressure to keep intact the fragile recovery, which has been challenged due to a pandemic resurgence in other parts of Asia, prompting manufacturing centers like Vietnam and Malaysia to put lockdown measures in place.

“The semiconductor problem had a pretty big impact, which weighed heavily on auto exports,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“I think it will likely have an impact on exports at least until the end of the year as parts supply shortages persist in Southeast Asia.”

A worker works in a container area in a port in Tokyo, Japan, March 16, 2016. REUTERS / Toru Hanai

Toyota Motor Corp (7203.T) cut its annual production target by 300,000 vehicles last week as rising COVID-19 infections slowed production at parts factories in Vietnam and Malaysia.

While vaccination rates are improving and daily COVID-19 infections seem to have peaked, analysts expect Japan to see annualized growth of 1.2% in the current quarter, much slower than last month’s forecast, according to a Reuters report Poll revealed on Tuesday.

By destination, shipments to China, Japan’s largest trading partner, rose 12.6% year over year in August, led by chemicals and semiconductor parts, the data showed.

Exports to the United States, the world’s leading economy, rose 22.8% as strong demand for power generating equipment offset a decline in car deliveries.

Deliveries to Asia as a whole rose by 26.1%, the slowest increase in five months, while deliveries to the European Union rose by 29.9% in August.

Imports in August rose 44.7% year over year from the average estimate of 40.0% due to stronger demand for fuels and medical supplies.

That resulted in a trade deficit of 635.4 billion yen ($ 5.81 billion), the largest deficit since December 2012 and higher than the median estimate for a deficit of 47.7 billion yen.

The trade data follows Wednesday’s Reuters Tankan poll, which found Japanese manufacturers’ confidence plunged to a five-month low in September as the latest wave of COVID-19 enforcement forced factory closings across Asia became. Continue reading

($ 1 = 109,4200 yen)

Reporting by Daniel Leussink; Editing by Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

source https://www.bisayanews.com/2021/09/16/japans-hot-exports-growth-cools-as-covid-19-hits-supply-chains/