Japan’s exports contracted in September, adding to the speculation of central bank easing monetary policy next week to support an economy hit by a slowdown in the global demand. A bitter Sino-U.S. trade war and the slow growth in China have multiplied the risks of the global recession, darkening the outlook for Japan’s economy as the world’s third-largest.
Exports in September slumped 5.2% from the last year, dragged down by car and airplane parts to the U.S and semiconductor production equipment to South Korea. This fall was more significant than a 4.0% drop expected by economists, which were marked the longest run of export declines since a 14-month stretch from October 2015 to November 2016. In terms of the volumes, exports fell 2.3% in the year to September, which was the second consecutive month of declines.
Though overall conditions are currently stable, this could become a factor for monetary easing if it did hit Japan’s economy as a whole. The BOJ will “certainly” reduce short or medium-term interest rates to ease monetary policy, Governor Haruhiko Kuroda confirmed on Saturday. The trade deficit is expected to be reduced over the coming months.

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