Japan logged a deficit for a second straight year last year as its exports were hurt by a slowdown of demand in China amid a tariff war with the U.S.

Government data released Thursday showed Japan's exports fell 5.6% in 2019, to 76.9 trillion yen ($701.6 billion), while imports fell 5.0% to 78.6 trillion yen ($710 billion). That left a deficit of 1.6 trillion yen ($14 billion).

Japan had a trade surplus of 6.6 trillion yen ($60 billion) with the U.S. last year, as exports fell 1.4% from 2018, and imports fell 4.4%. Shipments of computers, construction and textiles equipment and power generating machines contributed to a 3.7% increase in exports of machinery to the U.S. Vehicle exports, which account for nearly 40% of Japanese exports to the U.S., declined 5.5%, the data show.

Exports and most imports from around the world also declined amid a global slowdown. Exports to China dropped nearly 8%, matching the drop in exports to all of the rest of Asia.

In December, exports continued to fall, but at a slower pace than the month before, dropping 6.3%, while imports slipped nearly 5%.

"Looking ahead, we think the recovery in exports will be weaker than many expect. That reflects our view that GDP growth in Japan's main trading partners will remain subdued this year," Tom Learmouth of Capital Economics said in a report.

He noted that an increase in Japan's sales tax, to 10% from 8%, as of Oct. 1 has also hurt consumer demand and private investment.

Japan's exports of cars and other vehicles, which constitute nearly a quarter of all its exports, fell 4%, while exports of electrical machinery dropped 6.6% . Its imports of gas, oil and other fuels fell 12% as prices declined from a year earlier.

President Donald Trump has thrown out past trade deals, including that with China, that he said added to the U.S. trade deficit and cost the country manufacturing jobs.

News that a new virus that has afflicted hundreds of people in central China can spread between humans has rattled financial markets and raised concern it might wallop the economy just as it might be regaining momentum.

Health authorities across Asia have been stepping up surveillance and other precautions to prevent a repeat of the disruptions and deaths during the 2003 SARS crisis, which caused $40 billion-$50 billion in losses from reduced travel and spending.

The first cases of what has been identified as a novel coronavirus were linked to a seafood market in Wuhan, suggesting animal-to-human transmission, but it now is also thought to be spread between people. As of Wednesday, some 440 people were confirmed infected and nine had died from the illness, which can cause pneumonia and other severe respiratory symptoms.

A retreat in financial markets on Tuesday was followed by a rebound on Wednesday, as investors snapped up bargains. Share benchmarks were mostly higher, with Hong Kong's Hang Seng gaining 1.1% and the Shanghai Composite index advancing 0.4%. Japan's Nikkei 225 jumped 0.7%.

While the new virus appears much less dangerous than SARS, "the most significant Asia risk could lie ahead as the regional peak travel season takes hold, which could multiply the disease diffusion," said Stephen Innes, chief Asian strategist for AxiCorp. "So, while the risk is returning to the market, the lights might not turn green until we move through the Lunar New Year travel season to better gauge the coronavirus dispersion."

The 2003 outbreak of Severe Acute Respiratory Syndrome in China, along with cases of a deadly form of bird flu, resulted in widespread quarantine measures in many Chinese cities and in Hong Kong. More than 8,000 people fell sick and just under 800 people died, a mortality rate of under 10%.

While the ordinary flu kills hundreds of thousands of people each year, such new diseases raise alarm due to the uncertainties over how deadly they might be and how they might spread. That's especially true during the annual mass travel of the Lunar New Year festival, which begins this week.

"The cost to the global economy can be quite staggering in negative GDP terms if this outbreak reaches epidemic proportions as until this week, the market was underestimating the potential of the flu spreading," Innes said in a report.

In China, health officials stepped up screening for fevers. "We ask the public to avoid crowds and minimize the public gatherings to reduce the possibility of cross infection," Li Bin, deputy director of the National Health Commission, said Wednesday.

Just as with SARS, though, the impact of the disease is likely to fall heaviest on specific industries, such as hotels and airlines, railways, casinos and other leisure businesses and retailers, analysts said. Most declined Tuesday but rebounded on Wednesday as investors locked in profits ahead of the Lunar New Year holiday. The outbreak is a boon, meanwhile, for pharmaceutical companies and makers of protective masks and other medical gear.

"If the pneumonia couldn't be contained in the short term, we expect China's retail sales, tourism, hotel & catering, travel activities likely to be hit, especially in the first and second quarters," said Ning Zhang of UBS. Government efforts to offset the shock would help, but growth will likely rebound less than earlier forecast, Zhang said.

As of Jan. 17, the World Health Organization had not recommended any international restrictions on travel but urged local authorities to work with the travel industry to help prevent the disease from spreading while warning travelers who fall ill to seek medical attention.

The illness is yet another blow for Hong Kong, whose economy is reeling from months of often violent anti-government protests. The wider concern is China, where the economy grew at a 30-year low 6.1% annual pace in 2019. An interim trade pact between Beijing and Washington had raised hopes that some pressure from tensions between the two biggest economies might ease, and the latest data have showed signs of improved demand for exports.

The virus outbreak raises the risk such optimism might be premature.

"According to our analysis of the spread of the SARS virus, which so far appears very similar to 2019-nCoV (the new virus), we expect increased downward pressure on China's growth, particularly in the services sector," Ting Lu and other analysts at Nomura in Hong Kong said in a commentary.

The growing number of global travelers has contributed to the spread of various diseases in recent years, including Middle East respiratory syndrome, the Ebola and Zika viruses, the plague, measles and other highly contagious illnesses.

The World Economic Forum estimates that pandemics — cross-border outbreaks like the flu that killed 50 million people a century ago — have the potential to cause an $570 billion in annual economic losses.

The 2014-16 Ebola virus epidemic caused losses amounting to over $2.2 billion, according to the World Bank. That includes a 40% decrease in the number of working Liberians at the height of the crisis, lower exports and harvests, and costs for combating the disease.

Apart from the human tragedy, such crises gobble up resources needed for other government spending, exacting a harsh toll on the poorest economies. In Africa, the loss of health care workers to Ebola resulted in thousands more deaths of mothers and babies, hindered work on other diseases such as preventing and treating malaria, HIV/AIDS and tuberculosis, reduced vaccination rates and fewer surgeries, the World Bank said in a report.

Many survivors, meanwhile, suffer from lingering effects of the illnesses and the powerful drugs used to save their lives, becoming more vulnerable to hunger and other risks.

At the same time, increasingly sophisticated tools for collecting data and analyzing are aiding efforts to prepare for and cope with severe disease outbreaks.

In 2016, the World Bank set up a $500 million rapid response insurance fund, working with the WHO and insurance companies, to combat pandemics in developing countries. The fund uses "cat bonds," or catastrophe bonds, whose principal will be lost if the funds are needed to help deal with an outbreak. Private insurers have followed with products of their own meant to hedge against risks from such disasters.

Hopes are rising that a breakthrough in discussions on how to tax digital companies will emerge at the World Economic Forum on Wednesday.

José Ángel Gurría, the secretary general of the Organization for Economic Co-operation and Development group of leading industrial nations, told The Associated Press that he expects there to be a solution as "there is no plan B."

The OECD has been seeking to come up with a framework that would allow France to suspend its tax on the digital business of big tech companies like Amazon and Facebook. In return, the U.S. is expected to agree to an international approach to the issue and hold off retaliatory tariffs on the European Union.

French Finance Minister Bruno Le Maire , U.S. Treasury Secretary Steven Mnuchin and  Gurría are set to meet later Wednesday at the gathering of the elites in the Swiss ski resort of Davos.

In July, France caused consternation in the Trump administration when it pushed ahead with plans to slap a 3% tax on the French revenues of internet giants like Google, Amazon and Facebook. The tax is an attempt to get around tax avoidance measures by multinationals, which pay most of their taxes in the EU country they are based in — often at very low rates. That effectively means the companies pay next to no tax in countries where they have large operations.

The tax applies to the digital business of companies that have global revenues of over 750 million euros ($833 million), and French revenue over 25 million euros. The revenue threshold is supposed to allow more room for startups. France argues that tech companies are abusing their market dominance, notably through tax avoidance, and preventing others from a fair chance of competing.

Speaking Wednesday on CNBC from Davos, Trump faulted Europe for being "very tough" with the United States, though he had had a "great talk" with EU Commission President Ursula von der Leyen a day earlier.

"But I said 'If we don't get something, I'm going to have to take action. And the action will be high tariffs on their cars and other things that come into our country.'" he said. "Now saying that, I don't want your audience to get nervous. They (Europe) are going to make a deal because they have to."

"They have no choice," he said.

To avoid an escalation, the U.S. and France agreed in August to take a lead in forging an international agreement on how to tax digital business by mid-2020.

Hopes for an agreement rose Monday when French President Emmanuel Macron said in a tweet that he had had a "great discussion" with Trump on the digital tax issue. "We will work together on a good agreement to avoid tariff escalation," he said.

Gurría urged those involved to give "the time and the space" to the effort to create a global deal on the issue.

"Everybody will gain from that and then you won't have to be having these bilateral confrontations," he said.

"We are working very hard, we have 107 countries working on this, its not like a small club."

World share prices rebounded Wednesday as confidence rose in China's handling of an outbreak of a new virus that has infected 440 people, with nine confirmed deaths.

Britain's FTSE 100 gained 0.2% to 7,622.61, while the CAC 40 in Paris was flat at 6,047.81. In Germany, the DAX picked up 0.2% to 13,585.45. The future contract for the S&P 500 gained 0.4% while that for the Dow Jones Industrial Average rose 0.3%.

The World Health Organization was due to meet later in the day to determine if the new disease that first was reported from the central Chinese city of Wuhan is causing an international health emergency. In the meantime, China and other countries ramped up surveillance, including screenings for fever on aircraft and in airports.

Shares saw moderate gains as investors took advantage of a rare downturn in the markets to seek out bargains, analysts said.

Japan's Nikkei 225 index climbed 0.7% to 24,031.35 and the Kospi in South Korea surged 1.2% to 2,267.25. In Hong Kong, the Hang Seng jumped 1.3% to 28,3541.04. The S&P ASX/200 in Sydney gained 0.9% to 7,132.70, while the Shanghai Composite index recovered from early losses, picking up 0.3% to 3,060.75. India's Sensex lost 0.5% to 41,107.01. Shares

Markets seemed inured to the impeachment trial of President Donald Trump underway in the U.S. Senate, and there was scant news apart from the virus to drive trading. But South Korea reported better than expected economic growth in the last quarter of 2019, saying its GDP rose 1.2% from the previous quarter, an improvement on the previous quarter's 0.4% growth. Economists attributed the stronger growth to increased government spending, reduced trade friction and a recovery in demand for semiconductors.

"It continues a noticeable trend of improving data in Asia over the past few months, which does imply a recovery is underway," Jeffrey Halley of Oanda said in a commentary. However, he noted that a "soft underbelly" of risk remains, as evidenced by the worldwide retreat in financial markets Tuesday on news the new coronavirus can be spread between humans, not just between animals and humans as earlier suspected.

The outbreak of the new virus has coincided with the peak travel season in China for the Lunar New Year festival, and investors fret that it could hurt tourism and ultimately economic growth and corporate profits.

Benchmark U.S. crude fell 41 cents to $57.97 per barrel in electronic trading on the New York Mercantile Exchange. It dropped 20 cents on Tuesday to settle at $58.38 a barrel. Brent crude, the international standard, gave up 42 cents to $64.17 per barrel. Overnight, it lost 61 cents to close at $64.59 a barrel.

Gold fell $1.40 per ounce to $1,556.50. Silver fell 1 cent to $17.80 per ounce and copper fell 5 cents to $2.80 per pound.

The dollar rose to 109.95 Japanese yen from 109.86 yen on Tuesday. The euro strengthened to $1.1091 from $1.1084.

Hyundai Motor, South Korea's biggest automaker, posted its biggest revenue last year on an enhanced product mix and a positive effect from the foreign exchange rate, the company said Wednesday.

Hyundai's revenue gained 9.3 percent over the year to 105.79 trillion won (90.8 billion U.S. dollars) in 2019, topping the 100 trillion-won mark for the first time in the company's history.

Operating profit surged 52 percent to 3.68 trillion won (3.2 billion U.S. dollars), and net income almost doubled to 3.26 trillion won (2.8 billion U.S. dollars) in 2019 from 1.65 trillion won (1.4 billion U.S. dollars) in the previous year.

The robust earnings were attributed to the strengthened product mix with an increased sale of sport utility vehicles (SUV), such as Palisade, that offset the decline in overall sales volume.

The domestic currency's depreciation versus the U.S. dollar increased the conversion value of overseas vehicle sales.

The South Korean carmaker sold a total of 4,425,528 vehicles globally in 2019, down 3.6 percent from the prior year.

In the domestic market, automobile sale added 2.9 percent to 741,842 units, but overseas sale declined 4.8 percent to 3,683,686 units.