Container port in operation in Nagoya, Japan. Photo: AFP

Japan’s exports plunged 15.4% in the first half of 2020 from the same period last year, the largest drop in 10 years and the latest sign of economic disaster in this pandemic year, Kyodo News reported from Tokyo.

Moreover, the world’s number three economy saw its balance of trade register a deficit of 268 billion yen ($2.5 billion) in June, compared with a surplus of 268.8 billion yen in June 2019. The deficit was far worse than the shortfall of 35.8 billion yen that the market had anticipated, economic newswire Trading Economics reported.

Still, with Japan being an export superpower, and its shipments being an indicator of global economic spending, further examination of data indicates that the worst may be past.  

The June data marked an upward bounce from the deeper, redder figures of the two previous months, suggesting that the numbers have bottomed out and there may be brighter days ahead in H2 2020.  Japan had registered a modest trade surplus of 4.95 billion yen in March, then a shock deficit in April of 930 billion yen, followed by another 833.4 billion yen deficit in May.

For the first six months of the year, Japan’s cumulative trade deficit soared to 2.24 trillion yen, compared with 895.9 billion yen in the same period of 2019, according to Trading Economics data.

Kyodo, citing a preliminary first half report by Tokyo’s Finance Ministry, noted that the trade figures for the first half were the worst since 2009, during the global financial crisis.

A key Japanese export was especially hard hit. H1 2020 saw a 30.9% fall in car exports, while overseas shipments of auto parts declined 29%.

The fate of Japanese exports appears to mirror the geographic rampage of Covid-19. The pandemic first exploded in China, before infecting other parts of the region then surging West. Much of East Asia is now in a nascent, if wobbly, recovery while the United States remains mired in Covid-19 chaos.

Japan’s H1 shipments to the US fell 27.9%, year-on-year, with cars being notable victims of the crisis, while exports to China were down a more modest 3.6%, with chemicals and auto parts being the problem sectors, Kyodo reported.

Trading Economics suggested separately that better days are to come, citing economists noting that more countries are re-opening their economies and stimulus measures are taking effect.