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Needle Still Points North

MNI (London)
--BOJ Concern Disrupted Supply Chains Could Lower Production
By Hiroshi Inoue
     TOKYO (MNI) - Japan's real export index fell in January and the Bank of
Japan is concerned it will fall again in February when the coronavirus outbreak
will likely have a greater influence on manufacturers as supply chains are
interrupted, MNI understands
     The BOJ's own real export index fell 4.6% m/m in January, reversing a
revised 2.0% gain in December and officials are now eyeing Q1 data for signs of
a recovery from the 2.1% fall in Q4. The January weakness came as no surprise
given the Chinese Lunar New Year holiday.
     Exports fell for a 14th straight month in January, down 2.6% y/y, albeit
slowing from the 6.3% decline in December. Imports fell 3.6%, recording a 9th
straight decline. February's data is expected to show a greater fall in exports,
particularly to China, as the full force of the virus outbreak hits home.
     Overall, Japan saw a trade deficit of JPY1.313 trillion in January,
recording a third straight deficit.
     Latest data show a continued pick-up in global demand for IT-related goods,
although demand for capital goods remained weak, while demand for auto and auto
parts remains weak across the globe remained weak.
     Exports of semiconductors rose 1.4% y/y in January, up for a second
straight month following a 2.6% gain in December. Auto exports fell 4.7%
following a sharp 11.8% fall in December, while auto part exports fell 4.2% in
January vs a 10.9% decline in December.
     Machinery shipments fell sharply again in January, down 9.5% after falling
6.2% in December.
     Overall exports to China fell 6.4% y/y after a modest 0.8% y/y rise in
     Japanese manufacturers have started moving production out of China, fearing
the coronavirus outbreak could prolong plant closures and wreak further havoc on
supply chains.
     The BOJ still expects exports to pick up, but now thinks "the timing of
(the) recovery seems to be delayed from toward mid-2020 expected."
--MNI London Bureau; tel: +44 203-586-2225; email:
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
MNI London Bureau | +44 203-865-3812 |