The exports of Japan grew during February 2023, which makes it two consecutive years of growth for the country. A major portion of exports consisted of car shipments to the USA.
However, there are fears that global demand is slowly disappearing amid banking trouble and tight monetary policy. Although the export numbers are good, it is still not enough to be considered a good recovery after COVID.
As per the analysts, the weakness is coming from a global slowdown and a major reduction in household consumption.
The shipments for China have also slowed down for the 3rd consecutive month. This has made it difficult for the policymakers to stage a quick rebound post-COVID.
The data from MOF reveals that the exports' growth rate was 6.5% YoY in February, while economists were expecting a growth of 7.1%. And most of the growth came from car exports to the USA.
Japan's exports to China also fell by 10.9% YoY during February, which has raised fears among the markets. This is the 2nd month in a row that we have seen a decline of double digits. According to experts, this is due to weak demand for cars, display equipment, and auto parts.
The imports of Japan increased by 8.3% while the markets were forecasting an increase of 12.2%. This means that the trade deficit of Japan has reached almost 897 billion Yen, which is equal to $6.75 billion. This makes the 19th month in a row that the Japanese economy registered a trade deficit.
During the end of 2022, Japan managed to escape the recession by a narrow margin due to weak demand and a slowdown in exports.
With tight monetary policy worldwide, the Ukraine war, and supply chain problems, the recovery of Japan's economy will continue to be stalled.
For now, there's a 50% chance of Japanese economy going into recession, according to NRI's chief economist.