A cargo ship and containers are seen at an industrial port in Tokyo, Japan, February 15, 2022. REUTERS/Kim Kyung-Hoon/File photo

TOKYO – Japan’s exports fell for a second straight month in August, hit by a drop in Chinese demand for steel and heavy oil and fueling fears of a downturn in the face of high interest rates.

Ministry of Finance (MOF) data showed on Wednesday that exports fell 0.8 percent year-on-year in August, slower than economists’ average estimates of 1.7 percent and following a 0.3 percent decline in overseas exports from Japan. It was the second straight month of annual declines.

By destination, Japanese shipments to China, its largest trading partner, fell 11% year-on-year in August, marking a third consecutive month of double-digit declines.

“The growth of the Chinese economy itself is weak, or at least that is reflected,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“Therefore, the double-digit decline in exports suggests that the situation remains quite poor, and that the situation does not appear to have bottomed out yet.”

Exports to the United States rose 5.1 percent year-on-year in August, driven by deliveries of cars, mining and construction equipment.

Japanese policymakers are banking on external demand to restore slack and offset weak consumer spending.

However, trade data dashes hopes for an export-led recovery.

Partly due to weak domestic demand, imports fell by 17.8 percent, pressured by energy costs, the base effects of which are fading.

As a result, the trade balance stood at a deficit of 930 billion yen ($6.29 billion), marking two consecutive months in the red, the trade data showed.

($1 = 147.7900 yen)

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Japan’s exports extend decline as China slowdown bites

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