Article:
TOKYO (Kyodo) -- Japan posted a goods trade deficit for the third consecutive month in January on weak exports to China and the United States, government data showed Wednesday, as the outbreak of a new coronavirus clouds the outlook of the world economy.
Comments:
This was expected as its been the trend related to both China and the US the past year. But of course the virus situation and China has made the situation worse. Most likely its not going to get much better in the near future.
Article:
The trade deficit stood at 1.31 trillion yen ($12 billion), following an upwardly revised 154.55 billion yen deficit in December, according to a preliminary report released by the Finance Ministry.
Exports declined 2.6 percent from a year earlier to 5.43 trillion yen, down for the 14th straight month, and imports fell 3.6 percent to 6.74 trillion yen, falling for the ninth consecutive month, the ministry said, as trade with China shrank amid a slowdown in the world's second-largest economy.
Comments:
Again not really that surprising considering what is going on right now. Fourteen straight months was/is similar to the South Korea trade situation. The decline in imports, mostly likely is/was mostly related to China as the supply chains etc. have been severely disrupted. The Chinese economy was already slowing down before the virus situation as it was only expected to hit 6.5% for 2020.
Article:
Exports to China, Japan's biggest trading partner, dropped 6.4 percent to 896.57 billion yen on declines in products such as materials for chemical products and auto parts, while imports were down 5.7 percent to 1.74 trillion yen, led by items including mobile phones and aluminum.
As a result, the deficit stood at 838.53 billion yen.
Comments:
The drop in materials, chemical products, and auto parts, all most essential to supply chains, most likely all related to the virus situation. Even in South Korea, car manufacturers in South Korea are feeling the affects of the virus as they are shutting down products related to the same situation.
Most likely, in the months to come, we might begin to see global supply chains begin to be disrupted as Apple has already signaled its global supply chains related to China are also being disrupted.
Article:
A ministry official referred to the tendency for exports to China to weaken before the Lunar New Year holiday, which fell in late January, earlier than last year.
The impact of the new pneumonia-causing coronavirus originating in China, was hard to quantify, the official said.
"We can't say anything definite so far because the virus started spreading during the holiday. But we need to keep monitoring upcoming developments."
Comments:
Yes manufacturing activity and other activity slows down in China during the New Year holiday. But the virus situation of course has made it worse now. It is hard to exactly quantify many factors just yet. More time is needed to see all of the factors involved.
How much are supply really going to be affected and what is the real cause and how soon that they be corrected in the future, for Japan and globally.
Article:
Kazuma Maeda, an analyst at Barclays Securities Japan Ltd., said weaker exports to China were due to the timing of the holiday, and that the influence of the outbreak of the virus "will materialize in February or later."
"Although February would ordinarily be expected to bring a recovery, this year appears likely to see a decrease, especially for goods such as electronic components," Maeda said.
"Exports to the United States and Europe remain sluggish, suggesting they will not be able to offset any such weakness to China."
Comments:
Yes normally the January period is slow but this year even slower because of the virus situation. And yes, most likely, for now, February good be even worse. Electronic components are always a challenge if supply chains are disrupted, even more than usual or continues to be disrupted.
It would have been nice if exports to the US and the EU good be more robust but with the current global economic situation and of course political situation it is not a surprise.
Article:
Japan's trade surplus with the United States inched up 0.3 percent to 369.23 billion yen, the first increase in five months, helped by a decline in crude oil imports. Exports to the world's biggest economy fell 7.7 percent to 1.05 trillion yen, down for the sixth straight month.
The size of Japan-U.S. trade contracted despite their trade deal, which entered into force on Jan. 1 and eliminated or lowered tariffs on U.S. beef and other agricultural products, as well as on Japanese exports such as components for air conditioning units. The U.S. levy on Japanese cars remains.
Comments:
A Japan trade surplus with the US has kind of always been a given, meaning more products go to the US than come to Japan, or maybe not bulk but value or both. But a 6 month decrease is never good.
There might be, unfortunately, political situations involved here, as the US political situation has not exactly, recently, been good overall for global trade, or trade between the US and certain countries, or maybe all countries trading with the US.
Trade deals, in and of themselves, are not always balanced between countries, unfortunately. This current trade deal might not be very balanced, again, as most never are.
But it still comes down to consumer choice. For example will the supposed lower US beef prices be an incentive for Japanese consumers to buy more US beef? Time will tell. Or will restaurants etc. buy more US beef for the menus, time will tell.
It always been the same with US cars. Ultimately it comes down to consumer choice, and what Japanese consumers want. All the incentives in the world might not be enough for the Japanese consumer to buy a US car over a Toyota etc.
The continued US levy on Japanese cars, of course is most likely just a political situation. Its a very unfortunate situation. But at the same time, its possible, that US consumers, despite the higher prices on Japanese cars, might still buy, but maybe not as much as before. Again it comes down to consumer choice. Of course there could be incentives by car dealers in the US that might offset the levy or extra taxes as an incentive to get US consumers to buy Japanese cars.
Article:
Across Asia, including China, Japan's trade balance turned red for the first time in a year with a deficit of 567.86 billion yen, as the downturn of exports surpassed the slide in imports.
With the European Union, Japan saw a trade deficit of 91.38 billion yen, marking the seventh straight monthly red ink.
The figures were compiled on a customs-cleared basis.
Comments:
The global trade situation, right now, seems to be in an adjustment period, meaning, global trade is trying to figure out what is the correct balance or equilibrium for global trade in the current global, economic, and political situation taking place.
Add in the China virus situation and the variables are compounded, at least for now.
Time will tell how much overall global trade is going to be affected by all the relevant variables in play.
© 2020, Tom Metts, all rights reserved
© 2020, Tom Metts, all rights reserved
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