MITO, Japan — Japan’s trade surplus widened in August as the pandemic pummeled a wide array of industries and sapped consumer demand.
The 15% drop in exports from a year earlier was outpaced by a more than 20% decline in imports, according to preliminary data from the Finance Ministry released today.
In one rare bright spot, exports to China rose 5%. But both exports and imports with the U.S. fell more than 20%, helping reduce the politically sensitive trade surplus by 20% to 373 billion yen ($3.5 billion).
Many Japanese manufacturers provide chemicals, equipment and components for products assembled in China. Robust exports have helped drive growth in recent years but suffered as China’s economy slowed and the pandemic took hold.
The pace of the decline in exports has been lessening as pandemic-related shutdowns in China, the U.S. and Europe eased. Exports fell 28% year-on-year in May, 26% in June and 19% in July.
Exports in August totaled 5.23 trillion yen ($49 billion), outpacing 4.98 trillion yen in imports ($47 billion), leaving a surplus of 248 billion yen ($2.4 billion). That compared with a 152.2 billion yen deficit a year earlier.
Trade in most categories of products declined in August, with exports of transport equipment such as vehicles falling 23%. Exports of computers and phones rose, however, reflecting strong demand as many companies and schools adjust to remote work.
Weakness in exports to Southeast Asia took a toll, falling nearly 24%, as trade and travel have languished amid strict quarantine restrictions.
Helping to boost the trade surplus, imports of oil, gas and other fuels plunged 45%, partly thanks to lower prices for many commodities. Overall, imports have been falling for 16 straight months, in part due to lower prices for oil and other goods resource-scarce Japan must source overseas.
Despite the latest weak data, surveys of manufacturers show new export orders are recovering, said Tom Learmouth of Capital Economics.
“But while goods exports will continue to recover as activity picks up in Japan’s trading partners, exports of goods and services may not reach pre-virus levels until early-2022,” he said in a report.