Japan trade deficit narrows 92% on jump in export

Asia-Pacific shares were mostly up in 23 July trading as Japan reported a surge in exports for June.

TOKYO-Japanese exports rose at their fastest pace in five months in June, the government said Thursday, in a sign that external demand is supporting the country’s economic recovery.

Exports, conversely, increased at an unprecedented pace since January (+ 9.5%), to 6.5057 trillion yen (52.5 billion dollars), driven by the semiconductor and automotive sector in particular. In June, the value of imports jumped 9.5 per cent while imports were down 2.9 per cent. Over the six months through June the deficit shrank 77.4 per cent as weak commodity prices helped bring down Japan’s energy bill, which soared after it had to replace nuclear power in the aftermath of the Fukushima nuclear crisis.

“Japan’s export environment depends on U.S. economy growth”.

Imports fell 2.9% in value terms in June, marking the sixth straight monthly decline, the finance ministry said.

Shipments to the United States, whose economy has been on a recovery track, expanded 16.6 percent to ¥7.54 trillion, while imports from the world’s largest economy grew 12.1 percent to ¥4.13 trillion, bringing the trade surplus to ¥3.41 trillion.

Japan’s economic growth is expected to have slowed sharply between April and June as companies produced fewer goods while lowering inventories, and as exports slowed from the previous three months.

Marcel Thieliant from Capital Economics warned that the beneficial impact of falling gas and oil prices on Japan’s trade balance was running out of steam as the yen continues to weaken against the dollar.

Export volumes were unchanged, signaling limited support for industrial production that has pressured economic growth. “China will continue to pose a risk to Japan’s economy”, said Atsushi Takeda, an economist at Itochu Corp. Rents here are too high.” To reduce food transport costs, Onomura said the Japanese food industry was considering exporting more food by sea rather than by air.

The Bank of Japan last week lowered its growth forecast for the year through March 2016 to 1.7 percent from 2 percent.

The figures were measured on a customs-cleared basis.