Japan posts trade deficit in 2018, December exports slump to the weakest in 2 years

Japan posted a trade deficit of ¥1,203 billion for last year, reversing from the trade surplus in the previous two years.

Trade tensions between China and the United States (US), two of Japan’s biggest trading partners caused Japan to post a trade deficit for 2018, its first drag since 2015, data from the finance ministry showed on Wednesday. Exports in December for Japan also fell the most in more than two years, dragged down by weak global demand.

Japan posted a trade deficit of ¥1,203 billion for last year, reversing from the trade surplus in the previous two years. Annual growth in exports for the full year eased to 4.1% from 11.8% in 2017.

Exports to China gained by 6.8%, slower compared to the previous year’s 20.5% growth while shipments to the US eased to 2.3% from 6.9%.

For the month of December, the country posted a trade deficit of ¥55.3 billion, reversing from a ¥356 billion surplus a year ago.

Exports for the month contracted by 3.8% from a year earlier, which was worse than the 1.9% drop economists had expected. The fall was the sharpest year-on-year contraction since October 2016.

The trade tensions faced between the US and China has created a cascading effect to its exporting partners and production lines across Asia. Japan’s shipments to Asia, which amounts to more than half of overall exports, fell by 6.9% in December.

The country’s central bank is expected to maintain its massive monetary stimulus, and revise its growth and inflation forecasts for the year, on the onset of the weak export figures.

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