As exports slow, is Japan recession-bound? This is an interesting question, and my immediate response is yes, recession looks almost inevitable in Japan with exports folding the way they are in an economy where domestic consumption is unable to sustain growth.
Japan's exports fell year on year for the first time in more than four years in June (although they had been down month on month in both May and April, and ironically they were up in June over May) Exports decreased 1.7 percent in June 2007, according to the Finance Ministry this morning. The drop was the first since November 2003. (Click charts to enlarge.)
Exports to the U.S. were down by 15.4 percent year on year, and this was the 10th monthly drop and the biggest since November 2003. Shipments to Europe were down 11.2 percent, the second straight decline. Exports to China have been, more or less, holding up, and were up 5.1% on the year, although this is still down from a 12.2% rate of increase in May. Exports to Asia in general rose 1.5 percent, the slowest pace in two years. 
Central banks across Asia have been raising interest rates to combat inflation, slowing economic growth and weakening demand for Japanese goods. Policy makers in the Philippines, Thailand and Indonesia all raised borrowing costs this month. It is quite possible that the Reserve Bank of India will increase rates again next week.
Exports to Vietnam rose at an annual 28.9%, down from its February peak of 88% (y-o-y), to India they were down to 19.3% from 40.1% in February, Brzil was down to 20.7% from 38.6% in February. Only exports to Indonesia (at 26.6% y-o-y) and Russia, at 39.4% (y-o-y) are really holding up, and these are, of course, oil exporters.
Imports, on the
Japan: Recession-Bound As Exports Slow?
Edward is a macro economist, who specializes in growth and productivity theory, demographic processes and their impact on macro performance, and the underlying dynamics of migration flows. Edward is based in Barcelona, and is currently engaged in research into the impact of aging, longevity, fertility and migration on economic growth. He is also working on a book which has the working title: Population, The Ultimate Non-renewable Resource? He is a regular contributor to a number of economics weblogs, including India Economy Blog, A Fistful of Euros, Global Economy Matters and Demography Matters. He was, in fact, a founding member of all these weblogs. Edward follows in detail the Indian, Italian, Spanish, German and Japanese economies. He also has a more than a passing interest in the economies of Turkey and Brazil and in the emerging economies of Eastern Europe. Visit Edward's sites:
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