Japan trade data better than forecast, worries loom

Japan's exports fell in July, but not as sharply as expected, raising hopes that a gradual recovery is on track from the March 11 earthquake and tsunami disaster, official data showed Thursday.

Japan booked a trade surplus for a second month in a row, despite the carnage of its worst post war catastrophe, which claimed more than 20,000 lives, destroyed entire towns and wreaked widespread economic havoc.

But even with the relatively hopeful trade data, analysts warned more turbulence could lie ahead because of uncertainty over the US and eurozone economies as well as the rising yen, which makes Japan's export goods less competitive abroad.

Japan's exports in July were down 3.3 per cent from a year earlier, at 5.78 trillion yen ($75.4 billion), a figure that beat market expectations of a 4.4-per cent fall, the finance ministry said.

Compared to June, exports grew a seasonally adjusted 0.8 per cent, the third straight month of expansion.

Japan managed to book a trade surplus of 72.5 billion yen — a figure 90.8 per cent lower than the same month last year, and nearly matching the market forecast of a 70.1 billion yen surplus.

Meanwhile, imports grew 9.9 per cent to 5.71 trillion yen on rising energy prices, the ministry said.

'For the immediate term, we are seeing a recovery,' said Satoshi Osanai, an economist at the Daiwa Institute of Research.

Export oriented manufacturers have rebounded since the March 11 disaster devastated Japan's north eastern coast, destroying factories and infrastructure and disrupting industrial supply chains.

Economists have generally expected Asia's second largest economy to continue to strengthen for now, fuelled by quake reconstruction demand.

Gross domestic product data on Monday showed Japan's economy shrank by a smaller-than-expected annualised 1.3 per cent in the April-June quarter, fuelling hopes that it will grow again in July-September.

But the trade outlook worried some analysts, who said the persistent strength of the yen, a safe-haven currency in times of crisis, and uncertainty in key exports markets spell risks for Japan.

As the yen recently neared a post-war high against the dollar, forcing the government to intervene in markets, Japan's major manufacturers have threatened to move their factories overseas to mitigate the effect of the rocketing unit.

Source : New Age