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Japan export growth signals recovery
AFP - Thursday, January 27
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Japan export growth signals recovery
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TOKYO (AFP) - – Japan's trade surplus more than doubled in 2010 and exports to key trade partner China hit a record high, data showed Thursday, as robust overseas demand indicated gathering momentum for a fragile recovery.
Analysts said that the second consecutive monthly acceleration in Japan's exports in December, which grew 13 percent year-on-year, also showed that the country's economy was starting to move forward after a lull.
The 2010 surplus was more than 2.5 times higher than the previous year at 6.77 trillion yen ($82 billion), the finance ministry said, reflecting an overall pick-up in trade from the depths of the financial crisis.
Exports rose for the first time in three years, growing 24.4 percent in 2010 from the previous year to 67.41 trillion yen.
The data also illustrated Japan's reliance on key trade partner China, whose double-digit growth last year put it on track to eclipse the island nation as the world's second-biggest economy in nominal terms.
China's strong demand for cars and semiconductors boosted exports from Japan nearly 28 percent to a record 13.09 trillion yen in 2010.
"We can expect the pace of an economic recovery will accelerate further in the first half of this year," said Taro Saito, senior economist at NLI Research Institute. "I'd say the Japanese economy, which has been in standstill for some time, will start moving forward."
He said strong demand from emerging economies, namely in Asia, have contributed to Japan's brisk exports.
"When you look at the Japanese economy, its export growth in December is significant," Saito said. "This is a good sign for a recovery, also thanks to emerging Asian economies and a recovery in the United States."
On Tuesday Japan's central bank raised its forecast for the nation's growth in the current fiscal year to April to 3.3 percent from 2.1 percent and said the rate of inflation would be faster than initially thought next year.
While many expect a mild contraction for the final quarter of the 2010 calendar year, Bank of Japan Governor Masaaki Shirakawa said that Japan's economy was likely "to return to a moderate recovery path soon".
While Japanese exports expanded for a 13th straight month in December, the growth rate only began to pick up in November at 9.1 percent after slowing since February, when exports were up 45 percent.
The trade surplus grew 34 percent to 727.7 billion yen in December, larger than the market forecast of 474.8 billion yen.
Japan's export-reliant economy has been buffeted by the rapid appreciation of the yen against major currencies, making Japanese products more expensive overseas and eroding repatriated corporate profits.
However, the currency has eased back from 15-year highs against the dollar hit in November, giving some respite.
"The Japanese yen still remains at a high level, but its pace of appreciation is becoming moderate," Saito said.
For many Japanese firms, the yen's surge against the dollar and the euro has mitigated a post-financial crisis revival in demand and undermined the benefits of earlier cost cuts and restructuring.
More companies are considering moving production overseas to stay competitive against rivals benefiting from weaker currencies in their home countries.
Japanese automaker Daihatsu, a subsidiary of Toyota, partly blamed the impact of a strong yen in announcing it would pull out of the European market within two years amid steadily declining sales.
The greenback was quoted at 82.17 yen in Tokyo trade Thursday, off a 15-year low of 80.21 struck in November.
Japans parliament convened on Monday to mull Prime Minister Naoto Kans record 92.4 trillion yen annual budget to shore up an economy burdened by a debt that is forecast to grow to more than 200 percent of GDP this year.
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