Japan's exports decline most since 2009 as Covid-19 hits US-bound shipments

The trade data came a day after the Bank of Japan increased its support through lending schemes for struggling businesses to $1 trillion.

Japan's exports fell in May at the fastest pace since the 2009 global financial crisis as U.S.-bound car shipments plunged, bolstering expectations for a deep contraction in the world's third-largest economy this quarter.

Weak global demand for cars and slowing business spending could drag on Japan's export-led economy, even as China-bound trade shows signs of picking up and U.S. and European economies reopen.

The trade data came a day after the Bank of Japan increased its support through lending schemes for struggling businesses to $1 trillion.

Ministry of Finance (MOF) data out Wednesday showed Japan's exports fell 28.3% in the year to May, worse than a 26.1% decrease expected by economists in a Reuters poll.

That followed a 21.9% decline in April and marked the biggest annual drop since September 2009.

U.S.-bound exports - Japan's key market -- halved to mark the biggest annual drop since March 2009, due to more than 70% declines in shipments of cars and car parts, the trade data showed.

Exports to China, Japan's largest trading partner, fell 1.9% in the year to May, a smaller drop than the prior month's 4% annual decline.

Shipments to Asia, which account for more than half of Japanese exports, declined 12%, and exports to the European Union also fell 33.8%.

Japan plans to end Tokyo's state of emergency, eyes fresh $930 bn stimulus

Social distancing curbs were removed for most of the country on May 14 as new infections fell, but the government had kept Tokyo and four other prefectures under watch.

Japan is looking to lift a state of emergency for Tokyo and remaining areas still facing restrictions while also considering fresh stimulus worth almost $1 trillion to help companies ride out the coronavirus pandemic, Nikkei reported on Monday.

Social distancing curbs were removed for most of the country on May 14 as new infections fell, but the government had kept Tokyo and four other prefectures under watch.

The government will seek approval from key advisers for the lifting on Monday. If approved, Japan would have no regions under the state of emergency, which was first instated on April 7.

Tokyo Governor Yuriko Koike has said the capital would swiftly move into "stage one" of the lifting of curbs if the government ends the state of emergency. That would allow libraries and museums to reopen, and restaurants to stay open until later in the evening. Subsequent stages would see theatres, cinemas, and fairgrounds reopen.

While the world's third-largest economy has escaped an explosive outbreak with some 17,000 infections and 825 deaths so far, the epidemic has tipped it into a recession and plunged Prime Minister Shinzo Abe's popularity to multi-year lows.

An Asahi newspaper poll conducted at the weekend showed Abe's support rate at 29% - the lowest since he returned to power in late 2012 - and disapproval at 52%. The results mirrored a Mainichi newspaper survey published on Saturday.

Abe will hold a news conference at 6 p.m. (0900 GMT), where he is expected to announce the plan to lift the emergency state.

Japan braces for Q4 GDP slump, decline in output on coronavirus fears

Japan is among countries worst affected by the epidemic outside China, with 251 confirmed cases including those on a cruise ship.

Japanese policymakers on Friday braced for a sharp contraction in October-December growth and warned of the hit to output and consumption from the coronavirus outbreak, signalling alarm over a darkening outlook for the world's third-largest economy.

Bank of Japan Executive Director Eiji Maeda said gross domestic product (GDP) may have suffered a "big contraction" in the final quarter of last year due to sluggish overseas demand and damage to consumption from last year's sales tax hike.

"Japan's economy is expected to continue expanding moderately as a trend," thanks to robust capital expenditure and government spending, Maeda told parliament.

"But we need to be vigilant against various risks such as the impact the coronavirus outbreak could have on output and spending by inbound tourists," he said.

Economy Minister Yasutoshi Nishimura also told reporters the virus outbreak, as well as unusually warm weather that hurts sales of winter clothing, were "fresh factors weighing on the economy."

Analysts polled by Reuters expect Japan's economy to have shrank an annualised 3.7% in the October-December quarter, which would be the fastest pace of decline since 2014. The GDP data is due 8:50 a.m. Monday (2350GMT Sunday).

Japan is among countries worst affected by the epidemic outside China, with 251 confirmed cases including those on a cruise ship.

Some analysts expect Japan's economy to suffer another contraction in the current quarter as China's virus outbreak hurts exports, output and consumption through a sharp drop in overseas tourists.

The government decided on Friday to spend 10.3 billion yen from budget reserves to respond to the coronavirus.