Japanese trade drops by most since 2008/09 crisis

According to latest report released from customs department, it seems Japanese trading activity suffered a lot to start the year in January. Exports and imports both shrank to lowest level since 2008/09 crisis.

Key highlights -

• Exports contracted by -12.9% in January from a year ago and imports dropped by -18%. Both were larger than what economists had predicted. Merchandise trade balance turned to deficit to -¥646 billion.
  
• Slowdown in exports were broad based, however China contributed largely to the drop. China accounts for close to 20% of Japanese exports and in January, exports declined by -17.5% from a year ago. Exports to Oceania dropped by -12.5%, however its share in overall exports.
  
  
• Oil producers also contributed to the drop in exports. Exports to Russia declined by -31.7%, to Canada declined by -22%, Brazil -45%, UAE -10%, -14% for Saudi Arabia, -45% to Africa. However exports to Iran saw massive 120% rise.
  
  
• Exports to US, which accounts for more than 20% of total exports, suffered a dip of -5.3%.
  
  
• Drop in imports were largely due to drop in energy imports
  
  
• Machinery (including electrical), which accounts for 35% of overall exports, saw large decline of combined 28%. Second biggest components, transport equipment such as cars, saw minimal decline of -2.2%.

All in all, Japan's trade report presents clear global picture -

• Slowdown in global trade activity
• Lower energy prices and contraction by oil producers
• Resilient US economy
• Weakness in Chinese economy
• Iran's return to global market

Expect Japanese trade and exporters to suffer more, with Yen rising against Dollar. yen is currently trading at 113.8 per Dollar.