Japan's hot exports growth cools as COVID-19 hits supply chains

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Japan's exports extended double-digit gains in August, led by strong shipments of chip manufacturing equipment, although the pace of growth weakened as COVID-19 hit key Asian supply chains and slowed factory production.

The trade growth is unlikely to dispel worries about the outlook for Japan's economy, which has not yet recovered to pre-pandemic levels after taking an enormous hit from a collapse in global trade in the first quarter of 2020.

"Exports have been driving the economy. The recovery scenario for Japan's economy may become shaky if they won't grow," said Takumi Tsunoda, senior economist at Shinkin Central Bank. "I think it's likely to impact exports at least until the year-end as bottlenecks in parts supply in Southeast Asia continue."its annual production target by 300,000 vehicles last week as rising COVID-19 infections slowed output at parts factories in Vietnam and Malaysia.

Exports to the United States, the world's top economy, soared 22.8%, as strong demand for power-generating machines offset a decline in car shipments.

 

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