Exports from Japan contracted at the sharpest rate since the 2009 global financial crisis during the month of May, driven by a steep decline in car shipments to the US amid the ongoing coronavirus pandemic. According to data released by the Ministry of Finance (MOF), exports out of Japan declined by 28.3% YoY in May, worse than economists’ forecast for a 26.1% contraction and the previous month’s reading which stood at -21.9%.

Even as Japan’s major trading partner China resumes normal levels of economic activity and other regions such as the US and Europe emerge out of lockdowns, weak external demand is likely to keep Japan’s export-reliant economy under considerable strain in the near future. Exports to the US alone have contracted by 50%, even as shipments of cars and auto parts fall by 70% amid the coronavirus crisis.

Exports to the EU are down by 33.8% YoY in May while exports to Asia have contracted by 12% for the period. Even as economies reopen, business spending is expected to remain weak for the foreseeable future amid high levels of uncertainty about the economic outlook, which could keep exports under pressure.

Meanwhile, total imports into Japan have also come in worse than expected, falling by 26.2% YoY during May. Economists had forecast a decline of 20.4% instead, but domestic consumption in Japan also remains weak as consumers hesitate to step out of their homes and make purchases.