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Weak exports sink July GDP for disaster-hit Japan

Economy shrank 0.5% from June as domestic demand stayed flat and imports grew

A heat wave in Japan raised vegetable prices and curtailed consumer purchases.    © Reuters

TOKYO -- Japan's gross domestic product shrank 0.5% in July from the month before, researchers said Wednesday, as an uptick in exports trailed growth in imports and domestic demand remained flat from June.

Japanese imports grew by 3.3% from the previous month, exceeding an increase of 0.3% in exports, the Japan Center for Economic Research said Wednesday. Foreign demand subtracted 0.5 percentage point from the overall monthly figures.

The country's GDP last contracted on a monthly basis in real terms two months before.

Domestic demand registered no change overall. Individual consumption inched up 0.2%, while capital expenditures stayed flat from June. Japan's searing heat wave caused some consumers to put off buying vegetables in July, as lower crop yields raised prices. Flooding that lasted into July also dealt severe damage to western Japan.

According to Ministry of Finance statistics, July exports looked better on a year-on-year basis, increasing 3.9%. Shipments to China rose 11.9% to record levels, overcoming a 5.2% decline in those to the U.S. The boost in exports to China came as Beijing imposed new tariffs on American vehicles and buyers sought Japanese or European alternatives, analysts say.

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