Japan’s exports likely contracted for a fifth straight month in April as the US-China trade war raged, adding to pressure on its struggling economy, a Reuters poll of economists showed yesterday. Separately a leading indicator of capital expenditure due next week is forecast to have fallen slightly in March, raising concerns that companies could cut business investment as the dispute between Japan’s biggest trading partners drags on. Other data is expected to show consumer prices edged higher in April, but remained distant from the Bank of Japan’s elusive 2% inflation target. Overall, the data are expected to paint a picture of a sluggish economy that may require more stimulus from the central bank or the government if global trade flows continue to weaken. On Monday, separate data is expected to show Japan’s economy contracted slightly in the first quarter as exports, consumer spending and investment faltered due to the trade war. “The central theme is China’s economy is slowing because of trade friction with the United States, and this is a negative for Japanese exports,” said Norio Miyagawa, a senior economist at Mizuho Securities. “Japan will avoid a recession, but Japanese policymakers won’t be able to just sit on their hands if uncertainty about this trade dispute persists well into the future.” Exports are forecast to have declined 1.8% in April from a year earlier, according to the median forecast in the poll of 15 economists, after a 2.4% annual decline in March. Japan and many other export-reliant economies have suffered collateral damage in the 10-month-long Sino-US trade war, which has disrupted global supply chains and weighed on business confidence. Those tensions escalated this month, with the United States raising tariffs on Chinese goods in the midst of trade negotiations and China retaliating, dashing hopes for a quick resolution to the dispute. Imports are expected to have risen 4.8% on-year in April, resulting in a ¥203.2bn ($1.85bn) trade surplus, the poll showed. The finance ministry will release trade data at 8:50am Japan time on May 22. Core machinery orders are forecast to have fallen 0.7% in March from the previous month. While highly volatile, the data series is regarded as an indicator of capital spending in the coming six to nine months.
