In Japan, nominal export growth slowed to +3.9% y/y in July from +6.7% in June. Demand was mainly driven by Asia, notably by sound export increases to China (+11.9% y/y) and Hong Kong (+6.1%), and by the EU (+6.4% y/y). Exports to the U.S. decreased by -5.2% y/y. This news was followed by disappointing domestic activity data. Industrial production contracted further (-0.1% m/m after -1.8% in June) and retail sales growth slowed to +0.1% m/m (from +1.5%). Looking ahead, advanced indicators suggest an improvement. The Manufacturing PMI rose to 52.5 points in August (from 52.3 in July) as firms reported a rise in production, in employment and new domestic orders. Note that new export orders decreased on the back of rising trade tensions between the U.S. and its trade partners. Against this background, we expect economic growth to slow to +1% in 2018 (after +1.7% in 2017).