Japan’s exports likely contracted at the fastest pace in more than three years in August, a Reuters poll showed on Friday.
Adding to the challenges policymakers face, Japan’s core consumer inflation is seen in the poll as slipping to the lowest level in more than two years, largely thanks to weaker energy prices.
Exports in August are forecast to have slumped 10.9 per cent from a year earlier, which would be the biggest shrinkage since 14.0 per cent in July 2016 and a far sharper one than July’s 1.5 per cent drop.
An August contraction would also extend the streak of declines that began in December to a ninth month, reports Reuters.
Many export-reliant economies such as Japan have felt the pain from the US-China trade dispute, which has already led to a slowdown in manufacturing activity and is seen weighing on Japanese business spending and earnings.
“Weak demand due to an overseas economic slowdown especially centred on China pushed down both export volumes and prices,” said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.
The poll also forecast that imports would fall 11.2 per cent in August from a year earlier, likely indicating the trade deficit widened to 355.9 billion yen ($3.29 billion) from a revised 250.7 billion yen deficit the previous month.
Maruyama said he expects imports to find some support in September due to “pent-up demand ahead of a sales tax hike in October”.
On Oct. 1, Japan’s sales tax is scheduled to increase to 10 per cent from 8.0 per cent.
The Finance Ministry will publish trade data at 8:50 am Tokyo time on Sept. 18 (2650 GMT Sept. 17).
The Reuters poll found the core consumer price index, which includes oil products but excludes volatile fresh food costs, likely rose 0.5 per cent in August from a year earlier.
That would mark the weakest price growth since July 2017, when the index also expanded 0.5 per cent and a deterioration from 0.6 per cent in the previous month.
Japan’s economy grew in April-June, but at a slower-than-expected pace, revised data showed on Monday, as the US-China trade war caused a decline in business spending.