TOKYO (Reuters) - Japan’s annual exports in January fell the most since the global financial crisis as demand weakened in China and other major markets, leaving policy makers battling to revive a fragile economy after a fourth-quarter contraction.
Exports fell 12.9 percent year-on-year in January in their fourth straight month of declines, Ministry of Finance data showed on Thursday, led by a slump in shipments of steel and oil products as Japan and much of the rest of Asia were put to the sword by feeble external demand.
It was the biggest drop since October 2009 when the global financial crisis knocked demand across the world. The volume of shipments fell 9.1 percent year-on-year in January, down for seven months in a row and the worst slide in three years.
The latest data adds to growing concerns that Japanese authorities are increasingly left with few options to revive a stumbling economy even as the Bank of Japan remains proactive in policymaking, shocking markets last month by adopting negative interest rates to spark momentum.
HSBC co-head of Asian economic research Frederic Neumann said global trade suffered a significant deterioration at the start of 2016, blaming China for much of the downturn.
“Slowing growth in the mainland (China) economy is clearly taking its toll. Unfortunately, we see few signs that growth is bottoming out,” he said in a note to clients.
Indeed, Japan is not alone in suffering a rough start to the year for its exporters, with the chill in China rippling across trade-reliant regional economies such as South Korea, Taiwan and Singapore.
A ministry official said January’s annual sales decline was caused in part by exporters holding off on shipments from late in January ahead of the Chinese New Year holidays, which took place earlier than last year.
“The decline also came as a reaction to a big jump seen a year before,” Takeshi Minami, chief economist at Norinchukin Research Institute, said.
“Still, exports have been crawling at the bottom, so we cannot expect them to drive growth in the current quarter.”
The slowdown in China, Japan’s biggest trading partner, remains a big drag on the Japanese economy and globally, hurting exporters of commodities and a producers of wide swathe of consumer products.
In January, Japanese exports to China fell 17.5 percent from a year earlier, down for a sixth straight month due to declines in shipments of liquid-crystal device and organic compounds.
The world’s third-largest economy contracted an annualized 1.4 percent in October-December. While analysts expect a return to moderate growth in the current quarter, sluggish exports and weak consumer spending underscore the difficulty policy makers have in putting the economy back on track.
Editing by Shri Navaratnam