Japanese trade data for December has missed badly to the downside, fueling concerns over the state of the global economy.
Exports fell by 8.0% from a year earlier, an acceleration on the 3.3% contraction of November and below expectations for a decline of 6.8%. The annual decline, the third in a row, was the largest seen since September 2012.
Exports fell by 6.8% for the year, in line with expectations.
According to data released by Japan's ministry of finance, exports to China — Japan's largest trading partner — fell by 8.6%, an acceleration on the 8.1% pace seen in the 12 months to November.
Exports to the broader Asian region slid 10.3%, again faster than the 8.7% decline registered in November, while those to the US fell by 3.4% after increasing 2.0% in November.
As with exports, the performance of imports was equally concerning.
From a year earlier they slid by 18.0%, a significant acceleration on the 10.2% contraction registered in November and expectations for a decline of 16.4%.
It was the largest annual decline seen since October 2009.
With imports declining at a faster rate than exports, the nation's trade surplus swelled to 140.2 billion yen, the largest recorded since March.
To some, the ugly trade data points to the likelihood that Japan's economy, the third biggest in the world, may have contracted in the final quarter of 2015.
"Given declines in imports, domestic demand is likely to have slumped and thus chances are high that the economy suffered a contraction in October-December," Koya Miyamae, senior economist at SMBC Nikko Securities, said in an interview with Reuters.
On Friday the Bank of Japan will announce its first monetary-policy decision of 2016.
Given its track record for surprising markets, along with signals from the European Central Bank that it too may loosen monetary policy in the months ahead, a further expansion to the Japanese central bank's stimulus program cannot be ruled out given mounting disinflationary pressures at present.
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