Japanese exports grew at their fastest pace in 30 years in January, supporting recovery as the world’s second largest economy battles deflation and weak domestic demand.
Posting a surprise trade surplus, the country reported exports soaring at their fastest pace since February 1980, at 40.9 percent to JPY4.90 trillion (USD52.56 billion), backed by a rebound in demand from the rest of Asia as well as from developed countries.
"Exports continued to recover robustly, led by shipments for Asia," said Daiwa Institute of Research economist Hiroshi Watanabe on 17 March, who also warned that due to its weak domestic demand, "Japan’s economy can only count on exports."
Japan plunged into its most severe post-war recession in 2008 as its exports collapsed due to the global downturn, returning to growth in the second quarter of 2009. But the recovery remains fragile with falling consumer prices, high public debt and weak domestic demand all major concerns for policymakers.
2009 Export Expectations data showed a surplus of JPY85.2 billion (USD945 million), beating market expectations of a deficit of JPY145 billion (USD1.55 billion) and reversing a record deficit of JPY956 billion (USD10.25 billion) recorded during the slump a year ago. The figures showed Japan’s trade surplus with the United States and the European Union has widened and its deficit with China has narrowed.
Higher US demand for final products led to a boost in exports of parts and raw materials to China, where many of the products are manufactured, Watanabe said. Exports to the Asian powerhouse, which overtook the US as Japan’s top export market in 2009, surged 79.9 percent to JPY920.0 billion (USD9.86 billion) on higher demand for semiconductors and components, automobiles and plastics.
Prospects for China’s economy will remain key for Japan, said Takeshi Minami, chief economist at Norinchukin Research Institute. "China has shifted to credit tightening, which would slow its economy and reduce exports from Japan," he said, adding, "We need to watch developments in China." Exports to the US rose 24.2 percent to JPY710.4 billion (USD7.61 billion) to chalk up the first rise in 29 months, with automobile exports more than doubling.
Japan’s overall imports rose 8.6 percent to JPY4.82 trillion (USD51.69 billion). Economists said the rise, the first in 15 months, reflected higher energy prices rather than improving domestic demand. The export rises led Japan to score a 78.7 percent jump to JPY237.1 billion (USD2.54 billion) in its trade surplus with the US and to cut its deficit with China by 76.8 percent to JPY130.6 billion (USD1.4 billion).
Japan’s trade surplus with the EU more than tripled to JPY92.1 billion (USD987.3 million) from the year-before surplus of JPY27.8 billion (USD298.1 million).
The trade data was released a day after Toyota, the country’s biggest exporter, reported a rise in global sales despite its safety defect troubles, which have sparked mass recalls and production stoppages. Toyota’s global sales in January were up 15.3 percent year on year, with exports surging 43.5 percent.
Minami said an impact of Toyota’s recall crisis on the whole of the Japanese economy would be limited as the automaker had already been producing vehicles locally in the US. However, Daiwa’s Watanabe warned Japan’s economy would be weighed down if the Toyota crisis leads to public distrust in all Japanese cars.
The auto industry is the industry that has the strongest potential of affecting other industries, ranging from parts to services companies," he said, adding, "If the top of a pyramid collapses, it would damage its base."
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(Source: Japan Retail News)