Japan’s extended exports slump could push BOJ to ease next week

The international cargo terminal at the port in Tokyo. Japanese exports in September slumped 5.2 percent from a year earlier. (Reuters)
Updated 21 October 2019

Japan’s extended exports slump could push BOJ to ease next week

  • Exports to all major regions down
  • Global slowdown, trade protectionism seen as risks for economy

TOKYO: Japan’s exports contracted for a 10th straight month in September, adding to speculation the central bank could ease monetary policy as soon as next week to support an economy hit by a slowdown in global demand.
A bitter Sino-US trade war and slowing growth in China have heightened the risks of a global recession, darkening the outlook for Japan’s economy, the world’s third-largest.
Exports in September slumped 5.2% from a year earlier, Ministry of Finance data showed on Monday, dragged down by car and airplane parts to the United States and semiconductor production equipment to South Korea.
The fall was larger than a 4.0% drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.
In volume terms, exports fell 2.3% in the year to September, the second consecutive month of declines.
The extended fall in exports comes after the government lowered its assessment of the economy on Friday, raising a warning flag over weakness in exports.
That, among other factors, has triggered calls from some Japanese policymakers the government is ready to take fiscal measures if extra economic support was needed.
“There is a possibility that there will be another fall in exports hereafter,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.
“Though overall conditions are currently stable, it would become a factor for monetary easing if it did affect Japan’s economy as a whole.”
Markets are rife with speculation the Bank of Japan could ease at its Oct. 30-31 meeting, after it said at its rate review last month it would take a more thorough look at whether rising overseas risks could derail Japan’s fragile economic recovery.
The BOJ will “certainly” reduce short- to medium-term interest rates if it needed to ease monetary policy, Governor Haruhiko Kuroda told Reuters on Saturday.
By region, exports to China, Japan’s biggest trading partner, slipped 6.7% year-on-year in September, down for the seventh month as shipments of auto parts declined, offsetting a rise in those of electronic chips for semiconductors.
Exports to Asia — which account for more than half of Japan’s overall exports — dropped 7.8% in the year to September, falling for the 11th month, hurt by a 18.7% slide in semiconductor manufacturing parts, especially those to South Korea, which has been in a trade dispute with Japan.
Japan’s exports to the United States fell 7.9% in the year to September, weighed down by reduced shipments of cars over 3000cc and aircraft motors and parts.
Imports from the United States slipped 11.6% in September, causing Japan’s trade surplus with the world’s top economy to narrow by 3.5% from a year earlier to 564.1 billion yen ($5.2 billion), the trade data showed.
Washington and Tokyo signed a limited trade deal last month that cuts tariffs on US farm goods, Japanese machine tools and other products while further reducing the threat of higher US car duties.
Japan’s overall imports dropped 1.5% year-on-year, a smaller decline than the median estimate for a 2.8% decrease.
In volume terms, imports gained 6.8% which analysts said was largely because of front-load demand before a nationwide sales tax hike to 10% from 8% which kicked in at the start of this month.
“Going forward, imports are going to decline as consumption will be hurt” by the tax hike, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“The trade deficit is likely going to be reduced over the coming months.”
The trade balance came to a deficit of 123.0 billion yen, versus a 54.0 billion yen surplus seen by economists.


Case against Ghosn excuse to get him out of Nissan, claim lawyers

Updated 13 November 2019

Case against Ghosn excuse to get him out of Nissan, claim lawyers

  • The former motor giant chief’s legal team has alleged that both his arrest and the prosecution efforts have been illegal

TOKYO: The drama surrounding the arrest of Carlos Ghosn, former boss of motor giants Nissan and Renault, has yet to reach its climax. Yet the plot continues to thicken with each new development.

On Monday, Ghosn’s defense lawyers unveiled court submissions highlighting the circumstances in which the 65-year-old executive was arrested and subsequently held in detention.

“We believe that Mr. Carlos Ghosn is innocent. We believe that the arrest and the prosecution efforts thus far are illegal and therefore Mr. Ghosn should be immediately released,” the head of his defense team, Junichiro Hironaka, said during a press conference at the Foreign Correspondents Club of Japan in Tokyo on Monday.

Hironaka claimed that Nissan wanted to kick out Carlos Ghosn from the company and therefore put together a team dedicated to searching around for something that would justify them to do that.

“This prosecution motion wasn’t initiated because the prosecution side believed that Mr. Ghosn had committed an illegal act. Fundamentally there is a problem with this being treated as a criminal act,” he said.

Hironaka further said that the prosecutor’s office is supposed to be acting in the public good for everyone and not behalf of a specific corporation.

“From the investigation level, there were various problems and mistakes with this case. Furthermore, the Japanese persecution office can’t reach overseas so they rely on Nissan employees to go into Mr. Ghosn’s offices and residences and removed objects illegally,” he said.

Hironaka said there is no evidence to support the alleged wrongdoing claim that Nissan made payments to SBA in Oman, and Ghosn re-directed that money to himself or his family.

“The amounts that were paid by Nissan matched exactly the amounts due to SBA,” he said.

The lawyer had a similar response to the reports connecting some donations by Ghosn to a school in Lebanon that would somehow benefit himself. “There is absolutely no evidence or factual basis for indicating that,” Hironaka said.

He said that his team is trying to access correct information and find out what evidence the prosecution might have.

“I have made an effort to share information with the media, including the foreign media, during this whole pre-trial motion,” he said.

Under the Japanese system, the prosecutors are not required to disclose all the evidence at their disposal. Japanese law requires that prosecutors must disclose anything related to any evidence related to the specific filings they make.

They must also disclose any evidence that is related to the filings that are made by the defense counsel. However, there is no requirement for them to disclose evidence from other parts.

Ghosn was arrested at Tokyo’s Haneda Airport on Nov. 19, 2018, on multiple charges related to his stewardship of the two companies.

The cases involved not only Nissan-Renault and Japan’s Mitsubishi Motors (part of the Franco-Japanese alliance), but also the Japanese and French governments along with various key players from Asia and the Middle East.

Nissan was on the brink of bankruptcy in March 1999, with about 2 trillion yen ($17.6 billion) in interest-bearing debt.

This is when it entered a capital partnership with major French automaker Renault SA. Ghosn has been credited for turning the company around dramatically since then.

However, fears that the high-profile CEO and chairman was planning to merge Nissan into a much larger multinational motor alliance appeared to have fueled speculation regarding the future of the company.

It was reportedly argued within Prime Minister Shinzo Abe’s government that the automaker would no longer be recognizably Japanese.

The case has larger ramifications and the two governments have routinely become involved in discussions related to its future.

According to news reports, when Macron and Abe met in Buenos Aires, the French president asked that the Franco-Japanese alliance be maintained.

On being asked by Arab News Japan about reports of a prosecution team visiting Saudi Arabia and Oman, Hironaka confirmed that the visit indeed took place after Ghosn’s arrest.

“However, we have not been given any access to any information that they may or may not have gathered there,” he said.