Japan's exports dive 28.3% in May amid coronavirus, worst drop since GFC

According to a preliminary report by the Finance Ministry, Japan’s exports plummeted 28.3% in May vs. -17.9% expected and -21.9% last.

The dive in exports marked the 18th consecutive month of decline and the steepest annual fall since September 2009, courtesy the wake of the global financial crisis (GFC).

Imports plunged by 26.2% in the reported month vs. -12.9% expected and -7.1% previous while down for the 13th month in a row.

As a result, the country recorded a merchandise trade deficit of JPY833.40 billion in May vs. JPY -970.80 billion expected and JPY -931.9 billion last.

The adjusted merchandise trade balance for May stood at JPY -601 billion vs. JPY -996.30 posted in April.

Meanwhile, Japan May trade surplus with the US logged the smallest amount on record.

About Japan’s Trade Balance

The Merchandise Trade Balance Total released by the Ministry of Finance is a measure of balance amount between import and export. A positive value shows a trade surplus while a negative value shows a trade deficit. Japan is so much dependant on exports that the Japanese economy heavily relies on a trade surplus. Therefore, any variation in the figures influences the domestic economy. If a steady demand in exchange for Japanese exports is seen, that would turn into a positive.

Market reaction

The Japanese yen ticked a few pips lower on terrible exports data, driving USD/JPY to print fresh session highs of 107.44. The spot gains 0.08% so far.