Japan’s exports fall most since 2021 amid global slowdown

Japan’s exports declined by the most since February 2021 in September, sapping momentum from the country’s economic recovery as global demand weakened.

Exports declined 1.7% from a year ago led by cars, mineral fuels and construction machinery, and slipping to negative growth for the first time since November last year, the Ministry of Finance reported Thursday. The reading missed economists’ forecast of a 0.9% gain.

Imports rose 2.1%, led by electronic calculators and semiconductor parts, and slightly missing the consensus estimate of a 2.8% gain, while the trade deficit narrowed to ¥294.3 billion ($2 billion).


Thursday’s results indicate that Japan’s economy likely received limited support from external demand in the third quarter amid a global slowdown. Japan’s economy expanded in the three months through June, partly driven by a rise in private consumption, though the growth also appeared to be a temporary rebound after a deep contraction in the prior period.“It’s a weak result,” said Yayoi Sakanaka, senior economist at Mizuho Research & Technologies, adding that net exports will likely be a drag on the third quarter. “Looking ahead, though the yen is slightly weaker again, I don’t think it will be a tailwind for exporters” given that other stronger factors are at play, such as China’s strengthening of its own exports which will likely muscle out Japanese shipments.

The weaker exports reflect sluggish global growth amid growing uncertainty about the outlook in major economies. Shipments to China sank 7.3%, reversing gains of 5.2% the month before, while those to the US and Europe fell 2.4% and 9%, respectively. The World Trade Organization recently suggested that global goods trade in 2025 will grow less than initially forecast, as rising instability weighs on economic activity and threatens to disrupt shipments.

Still, central banks have started to cut interest rates to avoid deeper slowdowns. Last month, the Federal Reserve announced a half-percentage-point rate cut to sustain its economy, following a similar decision by its European counterpart. The European Central Bank is expected to lower rates again at its meeting Thursday.

The Bank of Japan is closely monitoring global trends, especially in the US and China, Deputy Governor Ryozo Himino said last week. Himino suggested employment and consumption data in these countries are becoming increasingly important for the bank’s decisions. In last month’s policy statement, the central bank noted that overseas economies have generally experienced moderate growth.

The BOJ will meet at the end of the month, with most economists expecting it to maintain current settings, according to a Bloomberg survey last month.

“While a weak overseas economy is one hurdle for the BOJ to raise interest rates, I believe the bank is more focused on domestic prices and exchange rate levels,” said Mizuho’s Sakanaka.

Japan’s currency remains another source of uncertainty, with the yen approaching the 150 level to the dollar. Finance Minister Katsunobu Kato recently said that he will closely watch both the positive and negative impacts of yen moves on Japanese businesses. While a weak yen can boost exporter profits, it also raises import prices, impacting households through increased costs, he said.

In the September trade report, the yen averaged 144.27 to the dollar, 1.5% stronger than a year ago, the ministry said.