Via Reuters Finance

TOKYO (Reuters) – Japan’s exports contracted for a 10th straight month in September, raising speculation the central bank could ease monetary policy as soon as next week to counter heightening overseas risks and a slowdown in demand.

FILE PHOTO: A man in a bicycle drives past containers at an industrial port in Tokyo, Japan, May 22, 2019. REUTERS/Kim Kyung-Hoon/File Photo

Exports in September slumped 5.2% from a year earlier, Ministry of Finance data showed on Monday, dragged down by car parts and semiconductor production equipment.

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.

Markets are rife with speculation the BOJ could ease at its Oct. 30-31 meeting, after it said at its rate review last it would take a more thorough look at whether heightening 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.

Risks to the global economy have risen from a bitter trade war between the United States and China, darkening the outlook for Japan’s economy, the world’s third-largest.

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.

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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.

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.

Japan’s exports to the United States fell 7.9% in the year to September, weighed down by reduced shipments of cars of 3000cc and higher.

Japan’s overall imports dropped 1.5% year-on-year, a smaller decline than the median estimate for a 2.8% decrease.

The trade balance came to a deficit of 123.0 billion yen ($1.14 billion), versus a 54.0 billion yen surplus seen by economists.

Reporting by Daniel Leussink; Editing by Sam Holmes & Shri Navaratnam