Tags: Japan | Export | Rebound | Growth

Japan Export Rebound Offers Hope for Economic Growth

Tuesday, 19 Aug 2014 08:22 PM

Japan's exports rose in July for the first time in three months in a tentative sign that demand overseas is starting to recover, which could raise hopes that exports can offset a slump in consumer spending.

The export data will be a relief for the Bank of Japan, which has predicated its economic growth and inflation forecasts on a rapid rise in net exports as part of the government's "Abenomics" plan to energize the Japanese economy.

The 3.9 percent annual rise in July was roughly in line with a 3.8 percent increase expected by economists in a Reuters poll. It followed a revised 1.9 percent decline in the year to June.

Growth in exports was driven by increased shipments of automobiles and electric machinery, the data showed.

Japan's exports have struggled for much of this year due to weak demand in Asia, so evidence of a recovery suggests the economy will rebound from a sales tax hike in April, which would ease pressure on policymakers to take steps to support growth.

Exports to Asia, which account for more than half of Japan's total exports, rose 3.4 percent in July from a year ago, finance ministry data showed on Wednesday. Exports to China, another important market for Japan, rose 2.6 percent in July. Shipments to the United States rose an annual 2.1 percent.

Japan's imports rose 2.3 percent in the year to July, compared with a median forecast for a 1.7 percent annual decline, as energy imports grew.

That brought the trade balance to a deficit of 964 billion yen ($9.4 billion).

The economy shrank an annualized 6.8 percent in April-June, its biggest slump since the March 2011 earthquake, stoking fears that consumer spending had weakened more than expected after the April sales tax hike. Exports also fell in the second quarter, showing that both domestic and external demand weakened.

Economists expect that Japan's gross domestic product will grow around 4 percent on an annualized basis in the current quarter, and many policymakers say stronger exports are needed to ensure that the economy remains on track.

The BOJ, however, has warned that the relocation of factories offshore, particularly for making cars, means that Japan may not be able to ramp up exports at will.

© 2017 Thomson/Reuters. All rights reserved.

 
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Japan's exports rose in July for the first time in three months in a tentative sign that demand overseas is starting to recover, which could raise hopes that exports can offset a slump in consumer spending.
Japan, Export, Rebound, Growth
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2014-22-19
Tuesday, 19 Aug 2014 08:22 PM
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