Japan Exports Tumble 10%, BOJ may Pump in More Money

Japan’s exports fell the most since the after math of last year’s earthquake as a global slowdown, the yen’s strength and a dispute with China increase the odds of a contraction in the world’s third-largest economy.

Shipments slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo on 22 October. Imports rose 4.1 percent.

Economy Minister Seiji Maehara pressed the Bank of Japan for more action on 21 October, saying the nation is “falling behind” in monetary stimulus and is at risk of another credit- rating downgrade. The BOJ cut its view of eight out of nine regional economies while Taiwanese unemployment rose to a one-year high, underscoring weakness across Asia after China’s third-quarter growth was the slowest since 2009.

China Spat

The decline in shipments, exacerbated by a spat with China over islands in the East China Sea, was the biggest since May last year, when the country was rebuilding supply chains wrecked in the March earthquake and tsunami.

Shipments to China, the nation’s largest export market, slid 14.1 percent from a year earlier. Exports to the European Union fell 21.1 percent, while those to the U.S. rose 0.9 percent. Auto shipments to all markets dropped 14.6 percent.

In a speech in Tokyo on 22 October, BOJ Governor Masaaki Shirakawa vowed to conduct “seamless” monetary easing as the Japanese economy is “leveling off.” In its quarterly regional economic report for October, the bank cut its assessment of eight out of nine Japanese regions, the most downgrades since 2009. Only Tohoku, the area hit hardest by last year’s earthquake, escaped a downgrade as the BOJ said its economy was supported by post- disaster reconstruction spending.

Earlier this month, the International Monetary Fund’s Deputy Managing Director Naoyuki Shinohara said in an interview that the BOJ has room to ease further, adding international weight to calls for more action by the central bank.