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.
Japan’s extended exports slump could push BOJ to ease next week
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
Saudi Arabia’s Ministry of National Guard achieves 100% localization of maintenance contracts
RIYADH: Saudi Arabia’s Ministry of National Guard has increased local spending on maintenance, repairs, and operations for its ground systems from 1.6 percent to 100 percent over the past four years.
The milestone was celebrated at a signing ceremony for new localization contracts under the patronage of the Minister of National Guard, Prince Abdullah bin Bandar bin Abdulaziz, with the participation of the General Authority for Military Industries.
The initiative is part of a broader effort to achieve sustainable development within the Kingdom’s military industries, enhance local capabilities, and support Vision 2030 goals. In line with this, the ministry has signed a series of contracts with local companies to improve the sustainability and efficiency of military systems. These agreements aim to strengthen military readiness, contribute to economic growth, and create job opportunities within Saudi Arabia.
These pacts include a sustainability contract for integrated weapons systems and heavy weaponry with SAMI Defense Systems Co., an electronic systems sustainment agreement with SAMI Advanced Electronics Co., and a vehicle sustainability deal with Alkhorayef Industries Co.
In conjunction with these contracts, GAMI announced signing two industrial participation deals to enhance local content and build national industrial capabilities.
The first agreement, signed with SAMI Defense Systems Co., focuses on the sustainability of integrated weapons and heavy weaponry, aiming to achieve over 60 percent industrial participation and create new employment opportunities for Saudi professionals.
The second contract, signed with Alkhorayef Industries Co., pertains to the sustainability of military vehicles and aims to encourage investment in qualified industrial activities to strengthen the defense sector.
The ministry highlighted the economic benefits of the localization program, including creating over 800 direct jobs and empowering national companies to take a central role in the Kingdom’s defense ecosystem.
Key accomplishments celebrated at the event included the development of a strategic implementation plan for sustainability localization, the establishment of innovation laboratories for spare parts manufacturing, and progress in achieving over 60 percent industrial participation in contracts.
These initiatives also contribute to enhancing local capabilities and fostering innovation within the Kingdom’s defense sector.
The event was attended by several high-ranking officials, including Minister of Industry and Mineral Resources Bandar Alkhorayef, GAMI Governor Ahmed Al-Ohali, Governor of the General Authority for Defense Development Faleh Al-Suleiman, and President of the General Authority for Civil Aviation Abdulaziz Al-Duailej.
Senior representatives from the companies awarded the contracts. Military and civilian officials from the Ministry of National Guard were also present.
SRC and Hassana launch mortgage-backed securities to boost real estate investment
RIYADH: The region’s first-of-its-kind residential mortgage-backed securities will be available in Saudi Arabia as the Kingdom seeks to enhance liquidity and expand investment opportunities in the real estate finance sector.
A memorandum of understanding, signed between the Saudi Real Estate Refinance Co., a subsidiary of the Public Investment Fund, and Hassana Investment Co., seeks to diversify Saudi Arabia’s financial markets by introducing an innovative asset class.
The issuance of mortgage-backed securities is anticipated to attract a wide base of local and global investors to the secondary mortgage market, creating new opportunities for investment in the sector.
Majeed Al-Abduljabbar, CEO of SRC, said: “Our partnership with Hassana marks a significant milestone in supporting the evolution of the housing finance landscape and fostering the development of Saudi Arabia’s capital markets.”
He added: “Together, we aim to introduce innovative financial solutions that deliver value to both investors and citizens while aligning with Vision 2030’s objectives.”
The deal, signed in the presence of Majid Al-Hogail, minister of municipalities and housing, and Mohammed Al-Jadaan, minister of finance, aligns with the Housing Program and Financial Sector Development Program under Vision 2030.
“This collaboration establishes a new standard for partnerships, enabling the development of scalable financial solutions that contribute to the Kingdom’s economic development goals. It aligns with Hassana’s strategy of diversifying its investment portfolios through long-term partnerships with entities like SRC,” said Saad Al-Fadhli, CEO of Hassana.
Hassana’s participation as a key institutional investor underscores the potential to create sustainable economic investment opportunities.
This comes as the Kingdom’s real estate market continues to show strong demand, with annual growth in residential sales transaction volumes across major metropolitan areas.
Saudi banks’ mortgage lending hit a near three-year high of SR10.06 billion ($2.7 billion) in November, marking a 51.23 percent year-on-year increase and the highest monthly amount in over two years, according to data from the Kingdom’s central bank.
This surge reflects strong activity in the housing market, with houses accounting for 65 percent of the loans, followed by apartments at 31 percent and land purchases at 4 percent.
As part of its Vision 2030 agenda, the Kingdom is fast-tracking residential construction, particularly in Riyadh, to accommodate its growing population and attract international talent.
Qatar’s foreign merchandise trade balance surplus slips 5%
RIYADH: Qatar recorded a foreign merchandise trade balance surplus of 57.7 billion Qatari riyals ($15.8 billion) in the third quarter of 2024, down 5 percent year on year, new data revealed.
Merchandise trade balance surplus is the difference between total exports and imports.
According to figures released by the Gulf nation’s Planning and Statistics Authority, the country’s total exports in the third quarter of 2024 — including domestic goods and re-exports — were valued at 87.8 billion riyals. This represents a 2.2 percent decline compared to the same period in 2023.
The value of Qatar’s imports during the same period amounted to 30.1 billion riyals, up 4.1 percent compared to the same quarter in 2023.
The figures fall in with the nation’s trajectory to restore government revenues to pre-2014 oil price shock levels and double its economy by 2031, according to an analysis by Standard Chartered in August.
The data also reflects the steady growth of Qatar’s non-oil economy, contributing to two-thirds of the country’s gross domestic product.
Exports breakdown
The figures further disclosed that the drop in exports is mainly attributed to lower exports of mineral fuels, lubricants, and related materials by 5 billion riyals, or 6.5 percent, and miscellaneous manufactured articles by 100 million riyals, or 22 percent.
Increases were mainly recorded in chemicals and related products by 1.5 billion riyals, or 24.5 percent, machinery and transport equipment by 1.2 billion riyals, or 53.3 percent, and manufactured goods classified chiefly by material by 400 billion riyals, or 17.1 percent.
Exports of crude materials, inedible, except fuels, also witnessed a rise of 100 million, or 24.8 percent.
Imports breakdown
The rise in import values is mainly linked to increases in machinery and transport equipment by 800 million riyals, or 6.7 percent, chemicals and related products by 400 million riyals, or 17.2 percent, and mineral fuels, lubricants and related materials by 320 million riyals, or 58.2 percent.
Imports of food and live animals also jumped by 300 million riyals or 9.8 percent.
Meanwhile, decreases were recorded mainly in miscellaneous manufactured articles by 400 million, or 6.7 percent as well as manufactured goods classified chiefly by material by 300 million, or 7.7 percent.
Principal destinations
The PSA data showed that Asia was the principal destination of exports for the country, representing 75.9 percent, as well as the primary origin of Qatar’s imports, accounting for 39.7 percent.
The Gulf Cooperation Council followed, accounting for 11.6 percent of exports and 11.3 percent of imports, respectively.
The EU came next, with 7.7 percent of exports and 26 percent of imports.
Turkish manufacturing sector nears stabilization in December, PMI shows
- Employment in the manufacturing sector saw a renewed decline, reversing a rise in November
- Input costs increased sharply due to higher raw material prices
ISTANBUL: Turkiye’s manufacturing sector contracted at the slowest rate in eight months in December, a business survey showed on Thursday, in a sign that the sector is nearing stabilization.
The Purchasing Managers’ Index (PMI) rose to 49.1 last month from 48.3 in November, moving nearer to the 50.0 threshold denoting growth, according to the survey by the Istanbul Chamber of Industry and S&P Global.
“December PMI data provided plenty of hope for the sector in 2025. While business conditions continued to moderate, the latest slowdown was only marginal as signs of improvement were seen in a range of variables across the survey,” said Andrew Harker, Economics Director at S&P Global Market Intelligence.
The survey highlighted a softer moderation in production, which declined at the slowest pace in nine months, suggesting some improvement in demand. The rate of slowdown in new orders and purchasing eased, although demand remained subdued.
“If this momentum can be built on at the start of 2025, we could see the sector return to growth. The prospects for the sector should be helped by a much more benign inflationary environment than has been the case in recent years,” Harker said.
Despite the positive signs, employment in the manufacturing sector saw a renewed decline, reversing a rise in November, the survey showed.
Input costs increased sharply due to higher raw material prices, but the rate of output price inflation slowed to its weakest in over five years as some firms offered discounts to boost sales.
Oil Updates — crude rises as investors return from holidays, eye China recovery
SINGAPORE: Oil prices nudged higher on Thursday, the first day of trade for 2025, as investors returning from holidays cautiously eyed a recovery in China’s economy and fuel demand following a pledge by President Xi Jinping to promote growth, according to Reuters.
Brent crude futures rose 17 cents, or 0.06 percent, to $74.82 a barrel by 08:47 a.m. Saudi time after settling up 65 cents on Tuesday, the last trading day for 2024. US West Texas Intermediate crude futures gained 19 cents, or 0.26 percent, to $71.91 a barrel after closing 73 cents higher in the previous session.
China’s Xi said on Tuesday in his New Year’s address that the country would implement more proactive policies to promote growth in 2025.
China’s factory activity grew in December, according to the private-sector Caixin/S&P Global survey on Thursday, but at a slower than expected pace amid concerns over the trade outlook and risks from tariffs proposed by US President-elect Donald Trump.
The data echoed an official survey released on Tuesday that showed China’s manufacturing activity barely grew in December, though services and construction recovered. The data suggested policy stimulus is trickling into some sectors as China braces for new trade risks.
Traders are returning to their desks and probably weighing higher geopolitical risks and also the impact of Trump running the US economy red hot versus the impact of tariffs, IG market analyst Tony Sycamore said.
“Tomorrow’s US ISM manufacturing release will be key to crude oil’s next move,” Sycamore added.
Sycamore said WTI’s weekly chart is winding itself into a tighter range, which suggests a big move is coming.
“Rather than trying to predict in which way the break will occur, we would be inclined to wait for the break and then go with it,” he added.
Investors are also awaiting weekly US oil stocks data from the Energy Information Administration that has been delayed until Thursday due to the New Year holiday.
US crude oil and distillate stockpiles are expected to have fallen last week while gasoline inventories likely rose, an extended Reuters poll showed on Tuesday.
US oil demand surged to the highest levels since the pandemic in October at 21.01 million barrels per day, up about 700,000 bpd from September, EIA data showed on Tuesday.
Crude output from the world’s top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report showed.
In 2025, oil prices are likely to be constrained near $70 a barrel, down for a third year after a 3 percent decline in 2024, as weak Chinese demand and rising global supplies offset efforts by OPEC+ to shore up the market, a Reuters monthly poll showed.
In Europe, Russia halted gas exports via Soviet-era pipelines running through Ukraine on New Year’s Day. The widely expected stoppage will not impact prices for consumers in the EU as some buyers have arranged alternative supply, while Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea.
