Japanese Exports Expand at Slowest Pace This Year as Global Demand Cools
Japan’s Export Growth Slows as Global Demand Cools
Tomohiro Ohsumi/Bloomberg News
Honda Motor Co. vehicles bound for shipment wait in a lot in Yokohama City, Japan. Overseas shipments increased 15.8 percent in August from a year earlier, the Finance Ministry said in Tokyo today.
Honda Motor Co. vehicles bound for shipment wait in a lot in Yokohama City, Japan. Overseas shipments increased 15.8 percent in August from a year earlier, the Finance Ministry said in Tokyo today. Photographer: Tomohiro Ohsumi/Bloomberg News
Japan’s exports grew at the slowest pace this year in August as a decrease in global demand and an advance in the yen threaten to undermine the nation’s recovery.
Overseas shipments increased 15.8 percent from a year earlier, the slowest since December, the Finance Ministry said in Tokyo today. The median estimate of 21 economists surveyed by Bloomberg News was for a 19 percent increase.
Today’s report underscores concern that the country’s recovery may falter after cooling exports and stagnant consumer demand more than halved the nation’s growth rate last quarter. Japanese authorities intervened in the foreign-exchange market this month for the first time since 2004 after the yen’s surge to a 15-year high against the dollar threatened earnings of exporters such as Sony Corp. and Honda Motor Co.
“Exports are losing steam, reflecting a slowdown in the global economy,” said Yoshiki Shinke, senior economist at Dai- Ichi Life Research Institute in Tokyo. “There are few people expecting Japan will fall back into a recession now, but if the yen resumes rising there’s a chance that could happen.”
The Japanese currency has gained 10 percent against the dollar this year, eroding the value of profits exporters earn overseas and hurting their competitiveness abroad. It traded at 84.33 as of 10:34 a.m. from 84.39 before the report.
‘Impossible’ to Win
“It’s impossible for Japan to win in global markets with the currency in the 80-yen range,” Koji Miyahara, chairman of the Japan Shipowners Association, said on Sept. 15. “Japan’s new administration should show it has zero tolerance for a stronger currency and should come up with additional steps,” said Miyahara, who is also chairman of Nippon Yusen K.K., Japan’s biggest shipping line.
From a month earlier, exports fell 2.3 percent, today’s report showed. Imports climbed 17.9 percent in August from a year earlier. The trade surplus fell for the first time in 15 months to 103 billion yen ($1.2 billion).
The stronger currency is driving investment abroad as exporters try to protect their profits from currency risk. Nissan Motor Co., Japan’s third-largest automaker, said this month that Indonesia has the potential to become an export base much like Thailand as the company moves production from Japan to counter a strong yen.
Sony is basing its operating profit forecast of 180 billion yen for the current fiscal year on an exchange rate of 90 yen against the dollar. The company generates more than 70 percent of revenue outside of Japan.
China Exports
The value of exports to China, Japan’s biggest market, climbed 18.5 percent in August from a year earlier, compared with 22.7 percent in July. Exports to the U.S. gained 8.8 percent, slowing from 25.9 percent in July as demand for automobiles slipped for the first time since October 2009. Shipments to Europe increased 13.7 percent.
“We had some temporary growth drivers that are now fading,” Jorgen Elmeskov, deputy chief economist for the Organization for Economic Cooperation and Development, said today in an interview in Tokyo, referring to the state of member countries. Fiscal stimulus has “plateaued” and “we need to establish a more durable growth dynamic,” he said.
Prime Minister Naoto Kan unveiled details of a 915 billion yen stimulus package on Sept. 10, his first since taking office in June. Japan’s central bank has also pledged to take additional measures as needed to sustain the recovery.
Recent data point to a tempering rebound in the economy, with growth last quarter slowing to a 1.5 percent annual pace, compared with 5 percent in the first three months of the year. The government revised its July industrial output figures to show that production fell rather than gained.
“Japan will probably be able to avoid falling back into a recession,” though its economic growth could pause, said Hiroshi Watanabe, a senior economist at the Daiwa Institute of Research in Tokyo.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net
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