Japan’s export growth signals economic recovery to continue in Q4
TOKYO: Japan’s export growth held steady in October, suggesting that brisk global demand for Japanese cars and electronics will likely carry its economic recovery into the current quarter.
Ministry of Finance data out yesterday showed that exports rose 14.0% year-on-year in October, led by shipments of cars to Australia and liquid-crystal device production equipment and raw materials for plastics to China.
That compares with a 15.8% annual gain expected by economists following a 14.1% increase in September.
The trade figures followed data that showed last week Japan’s economy expanded at an annualised rate of 1.4% in the third quarter, driven by solid external demand.
Analysts expect exports will continue to drive growth in October-December as China is seen likely to avoid a sharp slowdown thanks to infrastructure investment, and as progress on tax cuts brightens prospects for the United States.
“Looking at the near term, demand for electronics parts used for new-model smart- phones are expected to help Japan’s exports,” said Masaki Kuwahara, senior economist at Nomura Securities.
“In the longer term, brisk demand for capital expenditure in advanced nations will support the global economy and Japan’s exports as receding political uncertainty releases pent-up demand for upgrades of existing production facilities.”
In volume terms, Japan’s exports rose 3.8% in October from a year ago, after a 4.8% annual gain in September.
The value of exports to the United States rose 7.1% in the year to October led by motors and construction and mining machinery, following an 11.1% gain in the previous month.
Japan’s trade surplus with the United States rose an annual 11.3% in October to 644.7 billion yen (US$5.75bil), a source of concern given president Donald Trump’s demand for bilateral trade talks to fix trade imbalances under his “America First” policy.
Yesterday’s data marked the fourth straight month of annual growth in Japan’s trade surplus with the United States.
Shipments to China, Japan’s largest trading partner, rose 26.0% year-on-year in October to 1.35 trillion yen, the highest value on record.
Japan’s imports rose 18.9% in the year to October, versus the median estimate for a 20.2% annual increase.
It was the fastest annual increase since January 2014, pushed up by a weak yen and imports of crude oil, oil products and coal.
The resulting trade balance was a surplus of 285.4 billion yen in October versus the median estimate for a positive balance of 330.0 billion yen, a fifth straight surplus month. — Reuters