U.S. loses as Japan accelerates medical exports in falling trade environment

Japan’s international trade activity fell for an 11th straight month in March, Panjiva’s analysis of official data shows, with an 8.4% year over year slide. That was led by an 11.7% drop in exports likely relating to a drop in demand from overseas as economic activity slipped due to the coronavirus pandemic.

Shipments to China fell by less than average with an 8.7% dip likely reflecting the restart of the economy later in the month, as discussed in Panjiva’s research of April 14. The impact of the spread can be seen in a 16.5% slide in shipments to the U.S. and a 13.2% drop in exports to western Europe. 

JAPAN’S EXPORT DOWNTURN REACHES MONTH 16

At the product level around 1.1% points of the 11.7% drop was accounted for by a slump in exports in the volatile shipping industry. Signs of the recovery in Chinese demand can be seen in exports of raw materials including a 7.3% rise in iron/steel exports and a 5.1% increase in nonferrous metals. In electronics there was a 6.3% rise in semiconductor exports. 

Consumer and capital goods meanwhile generally saw a decline with semiconductor manufacturing machinery exports falling by 13.5% while exports of cars and parts fell by 13.9% and 17.9% respectively. The latter suggests the automakers see little respite in declining demand.

JAPAN’S MEDICAL SUPPLY EXPORTS SURGE

The spread of COVID-19 globally likely drove the demand underpinning a 22.7% surge in exports of medical products, principally pharmaceuticals. That’s somewhat surprising given the degree of medical protectionism occurring elsewhere in the world.

Notably though exports to the U.S. fell by 8.8%, after growing by a below-average 20.0% in February, while those to the EU surged 30.9% higher in March after expanding by 43.8% in February.

In absolute terms that meant exports to the U.S. fell by 56.4% sequentially in March. The differentiation may reflect the relative speed of government and healthcare providers’ responses to the coronavirus outbreak.

Shipments to China and South Korea meanwhile climbed by 15.8% and 25.5% respectively. The latter increased by 1.2% in February and after declining previously, suggesting humanitarian considerations are outweighing political considerations.

MEDICAL SUPPLY EXPORTS TO U.S. FALL ON ANNUAL AND SEQUENTIAL BASIS