Japan’s export growth slows, putting pressure on a fragile economy

Japan’s exports rose at a slower pace in October, offering little additional support for an economy trying to avoid a technical recession in the second half of the year.

“The value of exports rose 1.6% compared to the previous year, slowing from a 4.3% increase in September,” Japan’s Ministry of Finance said on Thursday.

Exports increased due to strong auto sales, especially to the United States, but the continued decline in chip equipment exports limited gains.

Imports fell 12.5%, mainly because of lower energy purchases. However, the trade balance returned to a deficit of 662.5 billion yen ($4.4 billion).

The slowdown in exports indicates another source of uncertainty for Japan at a time when steady inflation and limited wage growth are curbing domestic demand.

In the third quarter, business investment declined while consumer spending did not recover, leading to a deeper-than-expected contraction of Japan’s economy.

The strength of exports in the last three months of the year will be one factor that will help Japan avoid a contraction for the second consecutive quarter, but it depends on strong demand from its major markets.