(C) Reuters. FILE PHOTO: An industrial port is pictured in Tokyo
TOKYO (Reuters) – Imploding demand due to the coronavirus pandemic is likely to have resulted in Japan’s exports in May suffering their biggest decline since the 2009 global financial crisis, while consumer prices probably fell for a second straight month, a Reuters poll showed on Friday.
More weak data will reinforce expectations for a sharp contraction in the world’s third-largest economy this quarter due to the fall out from the pandemic.
Exports are expected to have fallen 26.1% in May from a year earlier, the steepest drop since September 2009 when they tumbled 30.6%, according to the median forecast from the poll of 17 economists. Exports declined 21.9% in April.
“Although there is some movement to re-open economic activities in the United States and Europe, exports of transport machinery and capital goods fell significantly due to weak auto sales and declines in capital spending,” Yusuke Shimoda, senior economist at Japan Research Institute, said.
The poll forecast a 20.4% decline in imports in May from a year earlier, following a revised 7.1% fall in April.
That implied a trade deficit of 1.07 trillion yen ($9.99 billion) in May.
The finance ministry will publish the trade balance data at 8:50 a.m. on Wednesday (2350 GMT Tuesday).
The nationwide core consumer price index (CPI), which excludes volatile fresh food prices but includes oil costs, likely dipped 0.1% in May from a year earlier, according to the poll’s median forecast. It would be second consecutive month that prices have fallen on a year-on-year basis.
In April, the core CPI fell 0.2%, which was the first year-on-year decline since December 2016.
“Consumer spending tumbled as people refrained from going out and their movements were also restricted. Downward pressure on prices has increased,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
The government will announce core CPI at 8:30 a.m. on Friday (2330 GMT Thursday).
Analysts in the poll forecast the Bank of Japan would keep its policy interest rate at minus 0.1%, and the 10-year Japanese government bond yield target at around 0% when it holds a policy meeting on June 15-16.
Japan’s exports to drop sharply and consumer prices to fall on virus crisis: Reuters poll
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