Japan's exports slump

Japan's exports slumped the most in six months in July as shipments to Europe and China tumbled, adding to concerns over global demand after a string of dire trade figures from Asia's export engines. The 8.1 percent annual fall was far deeper than economists' median forecast of a 2.9 percent drop. A 25.1 percent plunge in exports to the struggling European Union, the biggest such drop since October 2009, saw Japan post a record trade deficit with the region.
"Europe's debt crisis is the first factor to pull down exports, and the pace of decline is striking. This is comparable to the post-Lehman situation," said Masayuki Kichikawa, chief Japan economist at Bank Of America Merrill Lynch in Tokyo. Wednesday's figures add to the case that the bottom of the slowdown in economic growth for Asia's major exporters could well be pushed further back into the third quarter of 2012 from the second quarter.
Exports from Taiwan, a key part of the global technology supply chain, fell for a fifth straight month in July. South Korea, home to major carmakers, computer chip and flat-screen producers, recorded its sharpest fall in exports in July in nearly three years.
China's exports rose just 1 percent in July, undershooting expectations by a big margin. The slump in EU imports of Japanese goods underpinned expectations that the trading bloc has slipped into a recession.
Exports to China, Japan's largest trading partner, fell 11.9 percent from a year earlier, the biggest decline in five months, led by lower shipments of semiconductors, electronics and car parts. That gels with China data that has shown economic growth struggling to pick up after six straight quarters of decline despite two rate cuts and reductions in banks' required reserves.
In another discouraging sign, Japan's exports growth to the United States slowed in July for the third consecutive month, rising 4.7 percent from a year earlier. Reflecting the sharp decline in overall exports, the Ministry of Finance figures showed Japan swung to a larger-than-expected deficit of 517.4 billion yen ($6.5 billion).
Analysts said the data heightened the risk that overseas demand for Japanese goods may not recover in time to take up the slack from domestic spending as the reconstruction impact after last year's earthquake begins to fade. Data from South Korea and Taiwan suggested little relief for Asia. In the first 20 days of August, South Korea's exports fell 12.4 percent from a year earlier, leaving a $4.5 billion trade deficit for the period. Orders for Taiwan's exports, a forward indicator of demand, slumped 4.4 percent in July over the previous year, far more than expected.