Japanese Exports Dropped Sharp 26.2 Percent In June 2020

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JAKARTA - The COVID-19 pandemic has made countries in the world have to take the bitter pill because it has a huge impact on performance in the economic sector. Japan is no exception, the country of the Rising Sun must again experience a double-digit decline in exports in four consecutive months.

Reporting from Reuters, Monday, July 20, the Japanese Ministry of Finance (MOF) reported that due to the impact of the corona virus that hit the world, Japanese exports in June 2020 fell 26.2 percent compared to the previous year (year on year / yoy). The decline in exports in June was bigger than analysts projected in a Reuters poll of 24.9 percent.

The decline in exports in June followed the decline in the previous month which reached 28.3 percent (yoy), and became the worst weakening since September 2009. One of the causes of the slump in Japanese exports is the annual decline in car exports to the United States (US), which is the main export. from the Land of Sakura.

Japanese shipments to Uncle Sam's country fell by almost half due to falling demand for cars and spare parts. Global demand for cars and other durable goods has slumped since March as the COVID-19 pandemic pushed countries into lockdowns and forced businesses to close and people to stay at home.

"Exports are likely to decline for now. If domestic and external demand remain sluggish for an extended period of time, it will trigger a surge in bankruptcies and job losses in the second half of this fiscal year," said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Based on the MOF data, it is seen that shipments to the US fell sharply 46.6 percent in June. This occurred after vehicle shipments fell significantly by 63.3 percent, exports of aircraft engines plunged 56 percent, and shipments of auto parts fell 58.3 percent.

In fact, since 2018, the US has become Japan's largest export market, thanks to exports of motor vehicles, auto spare parts and chip-making machines.

Apart from the US, exports to China, which is Japan's largest trading partner, edged down 0.2 percent yoy. The slight correction occurred as declines in shipments of chipmakers and chemicals were offset by increased shipments of metals and automobiles.

Japanese Exports to Other Countries

Meanwhile, Japanese exports to Asia, which account for more than half of Japan's exports, fell 15.3 percent. Meanwhile, Japanese exports to the European Union fell 28.4 percent.

The decline in export performance has made it even more difficult for Japan to recover after slipping into recession for the first time in 4.5 years. The Japanese economy is expected to contract 5.3 percent in 2020.

This will be the biggest contraction since 1994. According to a Reuters poll, in 2021, Japan's economy will revive and grow by 3.3 percent.