Japan’s economic recovery took another hit Wednesday after the Ministry of Finance reported exports fell for the sixth-straight month in March. The coming months don’t look so hot either as the recent earthquakes could send economic activity even lower.
According to the ministry, March exports fell 6.8% from the year-ago month, after dropping 4.0% in February. However, it beat the economists’ consensus estimate for a 6.9% drop.
The decline was blamed on China’s slowing economy, soft demand for electronic components for products such as the iPhone, and a strengthening yen.
In fact, the strong yen and soft overseas demand left many saying that although confidence at Japanese manufacturers rose in April, it’s expected to get worse in the coming three months, according to a recent Reuters poll.
Analysts suggest that the weak economic news will force the government and the Bank of Japan (BOJ) to do more to stimulate growth. In addition, the quakes that began on April 14 were centered in a southern manufacturing hub, which could significantly hurt the supply chain and economic activity ahead.
Analysts told Reuters that the quakes could lead to a sharp drop in the country’s factory output of cars and other goods in April — an unwelcome development for a flagging economy — although the impact may be short-lived if the supply chain is repaired quickly.
Things aren’t expected to get better when Apple reports earnings next week. Analysts expect Apple to post its biggest-ever quarterly decline in iPhone shipments and offer a weak forecast for the current quarter.
“A delayed recovery in the US economy, slowdown in China, and sluggish demand for electronics parts on a cut in iPhone production were factors behind weak exports,” Hidenobu Tokuda, senior economist at Mizuho Research Institute told Reuters.
In March, Japan exports to China – its largest trading partner — tumbled 7.1% year over year, while the US-bound shipments fell 5.1%. Asia, which accounts for more than half of Japan’s shipments, saw exports sink 9.7%.
However, the European Union bucked the trend. Japan saw an uptick of 12.1%, the biggest year-on-year gain since February 2011. The increase came from fivefold increase in exporting ships to Italy and Greece, but the Ministry of Finance called this a temporary blip.