Tokyo: Japan’s exports fell for a 13th straight month in December, dragged down by US-bound shipments of cars, construction and mining machinery, in a sign weak external demand is keeping a lid on the export-reliant economy.

The 6.3 per cent year-on-year fall in exports was worse than a 4.2 per cent decrease expected by economists in a Reuters poll. It followed a revised 7.9 per cent year-on-year decline in the previous month, the Ministry of Finance data showed on Thursday.

Analysts and policymakers say a preliminary trade deal agreed between the United States and China last week and progress on Britain’s exit from the European Union would help ease worries over global trade, a key driver of Japan’s economy.

Yet, the latest data showed only a modest slowing in the pace of contraction and suggests a sure-footed recovery may be months away.

Bank of Japan policymakers have argued that solid domestic demand should help offset weak shipments and manufacturing activity.

On Tuesday, the BoJ nudged up its economic growth forecasts and sounded cautiously optimistic about the global outlook, though it said ongoing risks meant it was way too early to consider scaling down its massive stimulus.

By region, exports to China, Japan’s largest trading partner, grew 0.8 per cent in the year to December, led by demand for chip-making equipment, cars and plastic. It was the first annual increase in 10 months.

Shipments to the United States, the country’s No. 2 trading partner, fell 14.9 per cent year-on-year in December - a fifth straight month of falls - dragged down by cars, car parts and airplane motor engines, the MOF data showed.

Exports to Asia, which accounts for more than half of Japan’s overall shipments, decreased 3.6 per cent in the year to December, it showed.

BoJ Governor Haruhiko Kuroda said on Thursday the progress in US-China trade talks and Brexit helped ease risk sentiment, but added that uncertainty remains on the trade relations between Washington and Beijing.

“While risks surrounding global growth have subsided somewhat, they remain large,” he told a news conference, signaling the BoJ’s resolve to keep its powerful easing.

The International Monetary Fund on Monday trimmed its 2020 global growth forecasts on sharper-than-expected slowdowns in emerging markets, but said the US-China deal was another sign that manufacturing activity may soon bottom out.

Many economists expect the world’s third largest economy to have shrunk in the final quarter of last year as the US-China trade war hit exports and the October 1 sales tax hike weighed on private consumption. A moderate rebound is seen in the current quarter.