Fur­ther signs emerge of Ja­pan’s re­cov­ery slow­down

The Pak Banker - - 6international -

TOKYO: Fears that Ja­pan's re­cov­ery is head­ing for fur­ther slow­down deep­ened Wed­nes­day as data showed the nation's trade with the world rose only slightly and a cor­po­rate spend­ing in­di­ca­tor fell in Oc­to­ber.

The health of the tradere­liant econ­omy con­tin­ues to draw con­cern as ex­ports, its main en­gine for growth, slow be­cause of a strong yen and wan­ing over­seas de­mand while do­mes­tic de­mand re­mains soft.

Ja­pan's eco­nomic fis­cal pol­icy min­is­ter Banri Kaieda told re­porters Wed­nes­day that he ex­pected growth to be "sub­stan­tially lower" in the fourth quar­ter.

The cur­rent ac­count sur­plus-the broad­est mea­sure of trade with the rest of the world­widened 2.9 per­cent in Oc­to­ber from a year ear­lier to 1.44 tril­lion yen (17.20 bil­lion dol­lars), missing ex­pec­ta­tions of a 7.0 per­cent rise.

In Septem­ber the sur­plus rose 24.3 per­cent.

Other data from the fi­nance min­istry showed core pri­vate-sec­tor ma­chin­ery or­ders, a lead­ing in­di­ca­tor of cor­po­rate cap­i­tal spend­ing, fell 1.4 per­cent in Oc­to­ber from the pre­vi­ous month, the sec­ond con­sec­u­tive de­cline af­ter a 10.3 per­cent fall in Septem­ber.

The data also missed ex­pec­ta­tions of a 0.1 per­cent de­cline. Wed­nes­day's data il­lus­trated that the dou­ble whammy of the ex­pi­ra­tion of govern­ment sub­sides for au­to­mo­biles and other goods and slow­ing US, Euro­pean and Chi­nese de­mand con­tin­ued to threaten Ja­pan's econ­omy, said an­a­lysts.

"The next cou­ple of quar­ters are likely to be tough for Ja­pan, as ex­pir­ing in­cen­tives for pur­chases of con­sumer durables hurt de­mand," noted Richard Jer­ram of Macquarie Bank.

"Stalling ex­ports and a soft in­dus­trial cy­cle will erode cor­po­rate prof­itabil­ity and dam­age the man­u­fac­tur­ing in­vest­ment cy­cle."

How­ever, Jer­ram pointed out that ro­bust Ja­panese ma­chin­ery ex­port or­ders in­di­cated an ac­cel­er­a­tion of eco­nomic ac­tiv­ity in the re­gion and may help soften the blow for Ja­pan. "If ex­ports can show some mod­est growth then Ja­pan should be able to avoid re­ces­sion", he said.

Re­cent data showed Oc­to­ber ex­ports grew at their slow­est pace of the year af­ter the yen traded at 15-year highs against the dol­lar, ham­mer­ing the com­pet­i­tive­ness of the cru­cial sec­tor. "The yen's strength has also weighed on cor­po­rate sen­ti­ment," No­rio Miya­gawa, an econ­o­mist at Mizuho Se­cu­ri­ties Re­search & Con­sult­ing, told Dow Jones Newswires.

"Which in turn has played a role in keep­ing the cap­i­tal ex­pen­di­ture im­prove­ment still rather mild." -Afp

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