Japan's Trade Deficit Increases In September Due To Reduced Exports To China

Japan posted a JPY 558.6 billion (USD 7.0 billion) trade deficit in September.

Japanese exports fell 10.3% from the previous year in September to JPY 5.360 trillion (USD 67.7 billion), the fourth straight month of decline, after decreased 5.8% on year in August. 

Exports to China dropped 14.1% on year to JPY 953.8 billion (USD 12.0 billion) in September, sharper than the previous month's 9.9% decline and marking the fourth consecutive month of contraction. Exports of motors, cars and auto components declined significantly, down 48.7%, 44.5% and 17.5%, respectively.

Exports to the U.S. grew 0.9% from a year earlier, the 11th straight month of increase, but the weakest since January's 0.7% rise.

Japanese imports rose 4.1% from a year earlier to JPY5.918 trillion (USD 74.7 billion) after a 5.4% fall the previous month.

According to DJ, some analysts have estimated that decreased exports to China would bolster the chance of Japan's economy contracting for two straight quarters through December, a situation generally viewed as a recession. 

The increased risk of recession, in addition to the failure to meet 1% inflation target, will bring an increased pressure from the government to the BOJ to ease further. The BOJ is holding its policy meeting later this month.