Japanese trade data for December has missed badly to the downside, fueling concerns over the current state of the global economy.
From a year earlier, exports fell by 8.0%, an acceleration on the 3.3% contraction of November and below expectations for a decline of 6.8%. The annual decline, the third in a row, was the largest seen since September 2012.
Over the year, total exports fell by 6.8%, in line with expectations.
According to data released by Japan’s ministry of finance, exports to China – Japan’s largest trading partner – fell by 8.6%, an acceleration on the 8.1% pace seen in the 12 months to November.
Exports to the broader Asian region slid 10.3%, again faster than the 8.7% decline registered in November, while those to the U.S. fell by 3.4% having increased 2.0% in November.
Like exports, the performance of imports was equally concerning.
From a year earlier they slid by 18.0%, a significant acceleration on the 10.2% contraction registered in November and expectations for a decline of 16.4%.
To put the drop into perspective, it was the largest annual decline seen since October 2009.
With imports declining at a faster rate than exports, the nation’s trade surplus swelled to 140.2 billion yen, the largest recorded since March 2015.
To some, the ugly trade data points to the likelihood that Japan’s economy may have contracted in the final quarter of 2015.
“Given declines in imports, domestic demand is likely to have slumped and thus chances are high that the economy suffered a contraction in October-December,” said Koya Miyamae, senior economist at SMBC Nikko Securities in an interview with Reuters.
On January 29 the Bank of Japan (BoJ) will announce its first monetary policy decision of 2016.
Given its track record for surprising markets, along with signals from the ECB that it too may loosen monetary policy in the months ahead, a further expansion to the BOJ’s QQE program cannot be ruled out given mounting disinflationary pressures at present.
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