VINACHEM

Japan’s chemical exports in August fell by 11.7% year on year to yen (Y) 873.1bn ($5.9bn), weighing on its overall shipments abroad which fell for the second straight month, with China’s slowdown continuing to dampen trade.

For organic chemicals, exports fell by 19.1% year on year to Y152bn in August, while shipments of plastic materials were 2.9% lower at Y237.9bn even as volume inched up by 1.3% to 412,307 tonnes, data from the Ministry of Finance (MoF) showed on Wednesday.

August exports of motor vehicles rose by 40.9% year on year to Y1.43tr, while those of motor vehicle parts slipped by 1.1% to Y313.7bn.

Overall exports of the world’s third-biggest economy slipped by 0.8% year on year to Y7.99tr in August, while imports shrank by 17.8% to Y8.92tr, keeping the country in trade deficit for the second straight month.

August trade deficit at Y930.5bn was down 66.7% year on year.

Total shipments to the US – Japan’s largest export destination for August – rose by 5.1% year on year, while those to China fell by 11%.

China’s economic slowdown is expected to weigh on the Japanese economy given the countries’ strong trade links. China is Japan’s biggest overall trade partner.

The Organization for Economic Cooperation and Development (OECD) on 19 September cut its 2023 growth forecast for China to 5.1% from its previous forecast of 5.4% in June.

For 2024, the growth of the world’s second-largest economy would decelerate to 4.6% against OECD’s earlier projection of a 5.1% expansion.

The OECD raised Japan’s GDP growth forecast for 2023 to 1.8% from 1.75% previously, representing an improvement from the actual 1.0% expansion in 2022.

“Japan is the only advanced economy in the G20 without any increase in policy interest rates so far. Improving wage growth and strong service exports are expected to help boost GDP growth,” it said.

The world economy is expected to grow by 3.0% in 2023, before slowing down to 2.7% in 2024, based on OECD’s latest estimate.

“A disproportionate share of global growth in 2023-24 is expected to continue to come from Asia, despite the weaker-than-expected recovery in China,” the OECD said.

“Growth in China has however lost momentum, with the initial impetus from reopening fading and structural problems in the property sector continuing to weigh on domestic demand,” it said.

Global growth is expected to dip both this year and next, remaining below trend throughout the period.

Annual global GDP growth is expected to expand by 3% this year, down from the 3.3% expansion in 2022, before slowing to 2.7% in 2024.  – ICIS –