Japan’s export growth slows

Japan’s exports rose in April from a year earlier led by US-bound shipments of cars, but the monthly pace of growth slowed from March — a worrying portent for external demand as a slowdown in the economies of China and the US clouds the outlook.

Japanese ministry of finance data, published yesterday, showed exports grew 8% year-on-year in April, versus a 6.4% gain seen by economists in a Reuters poll, slowing from an 8.5% gain in March.

Compared with March, shipments fell 1.5% in April. Slowdown in export growth could hold back the economy’s recovery from last year’s recession, after last week’s data that showed Japan’s economy posted two straight quarters of moderate expansion.

Policymakers count on exports as a key driver of corporate activity, which could help boost wages and spur private spending to generate a virtuous growth cycle needed to shake off years of deflation.

“The figures were not so bad as we thought but shipments to China and Asia turned out weak, which is worrying for the outlook for Japan’s external demand,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

Shipments to China, Japan’s largest trading partner, rose 2.4%, slowing from a 3.9%gain in March, the data showed.

China-bound car exports halved in the year to April. Exports to Asia, which account for more than half of Japan’s shipments, grew 6%, slowing from a 6.7% gain in March.

Tokuda said the slowdown probably reflected weakness in Thailand and other ASEAN economies. Exports to the US rose 21.4% in the year to April, keeping the pace of gains in the previous month with brisk shipments of cars and vehicle engines.

Imports fell 4.2% in the year to April, a fourth straight month of annual declines, mainly due to a sharp fall in crude oil prices. The fall was deeper than the median estimate for a 1.5% drop.

The trade balance swung back into a deficit of 53.4bn yen, much smaller than the median estimate for a 318.9bn yen deficit, after posting the first trade surplus in nearly three years in March.

First quarter GDP data showed export growth slowed to 2.4% from 3.2% in October-December, reflecting the slowdown in the US and Chinese economies. Japan’s imports outpaced exports, causing external demand to shave 0.2% off the economic growth in January-March.

Reuters