Supply chain disruptions have hit manufacturers in Japan, impacting the country's exports negatively. According to preliminary data released in September, Japan's exports increased by 26% in August compared to the same month last year; however, this number is less than the 30% predicted by analysts.
Furthermore, exports increased by 37% year over year in July, and the expectations continued to rise as the pandemic's impact faded.
Imports Outstrip Exports
The preliminary data released in September also showed that the world’s third-biggest economy had a trade deficit of 635.4 billion yen ($5.81 billion) as imports rose by nearly 45% to 7.24 trillion yen. This change is primarily due to the importation of oil, gas, and coal. While Japan’s car exports dropped by 1.5% in August, fuel imports increased by 21%.
Tokyo and other cities remained in an emergency because of the Delta variant outbreak; however, consumer demand remained buoyant. Marcel Thieliant of Capital Economics reported, “the strong rise in imports suggests that consumer demand has remained relatively strong.” Exports to the US and Asia also rose by 23% and 26%, respectively, while exports to China were weaker at almost 13%. Fortunately, economists believe export business in Japan will probably increase in the coming months as regional economies recover from recent pandemic waves.
Obstacles for the Automotive Industry
On the other hand, carmakers have had to slow down their production as they experience an inadequate supply of computer chips and other components. This problem results from the current high demand for IT products and supply constraints caused by factory shutdowns across Asia.
Disruptions in the global supply chain have undoubtedly had a significant impact on Japan. In September, exports rose by only 13% year-on-year; shipments to China, the country’s biggest trading partner, rose by 10.3% year-on-year, compared to 13% in the previous month. China’s weak economic recovery presents a challenge to Japanese manufacturers and the ability of export-reliant Japan to experience rapid growth in the short term.
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