Japan posted a 6.5-percent year-on-year drop in exports in October 2012, its fifth in the year. The October drop in exports was significantly higher than the 4.9-percernt dive forecast by economists. Japan’s exports were seemingly impaired by the current territorial dispute between the country and China, as well as by the frail global demand. This could be seen as a sign the Japanese economy might be heading into recession, giving more weight to calls for easement of policy.
The country’s exports to China, considered as its largest market, dropped 11.6 percent year-on-year in October following a 14.6-percent plunge in September, as the Sino-Japanese dispute resulted to a consumer boycott of Japanese goods.
The export decline in October marked Japan’s fourth straight monthly trade deficit, as the country scuffle with a strong yen and weak demand. Takeshi Minami, chief economist at Norinchukin Research Institute forecasted that as the Chinese economy is slowing down, Japanese exports are “likely to stop worsening” and may start to improve from the next fiscal year.
Minami, however, said that China cannot be expected to drive Japanese exports the way it used to because of the boycotting of Japanese goods due to the territorial dispute. He added that given continually weak indicators, the Bank of Japan may ease policy further as early as next month.
The Bank of Japan’s monetary policy remained steady at a review on Nov. 20, 2012, standing its ground in the wake of calls from Japan’s probable next prime minister to pursue "unlimited" easing to revitalize an economy considered in recession. The Bank of Japan released its monthly report on economic and financial developments the following day, saying that it has stayed vigilant on the downward pressure on the economy resulting from the trade issue with China.