Japan’s Exports Rise Most Since ’10 as Deficit Swells: Economy

Photographer: Kiyoshi Ota/Bloomberg

Honda Motor Co. vehicles bound for shipment sit in a lot at a port in Yokohama. Close

Honda Motor Co. vehicles bound for shipment sit in a lot at a port in Yokohama.

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Photographer: Kiyoshi Ota/Bloomberg

Honda Motor Co. vehicles bound for shipment sit in a lot at a port in Yokohama.

Japan’s exports (JNTBEXPY) jumped by the most since 2010 in July, aiding Prime Minister Shinzo Abe’s efforts to drive an economic recovery even as rising energy costs boosted the trade deficit.

Exports increased 12.2 percent from a year earlier after a 7.4 percent rise in June, the Ministry of Finance said in Tokyo today. Imports climbed 19.6 percent, leaving a trade deficit of 1.02 trillion yen ($10.5 billion), the third biggest on record in data back to 1979. The seasonally-adjusted deficit widened from June to 944 billion yen.

The stronger exports show Japan’s economy is benefiting from a recovery in demand in Europe and the U.S., and the yen’s 11 percent decline against the dollar this year. The health of the economy will be the key to Abe’s decision in the next month on whether to raise a sales tax to 8 percent in April from 5 percent now, a step that would drag on consumption while supporting the nation’s finances.

“The weakening of the currency will benefit the economy as it will help companies in the auto and information technology sectors,” said Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management in Tokyo. “I’m not so concerned about the trade deficit because energy prices will fall sooner or later and export volumes will rise as the global economy improves.”

Photographer: Kiyoshi Ota/Bloomberg

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Photographer: Kiyoshi Ota/Bloomberg

A Kawasaki Kisen Kaisha Ltd. "K" Line shipping container is loaded onto a container ship as workers monitor on the ship at a shipping terminal in Yokohama.

Exports to the European Union jumped 16.6 percent after an 8.6 rise in June, boosted by products including cars, machinery and steel. The euro area’s economy emerged from a record-long recession in the second quarter, data from the EU’s statistics office in Luxembourg showed last week. Japan’s exports to the U.S. rose 18.4 percent on year, faster than a 14.6 percent rise in June.

Imports Jump

Toyota Motor Corp., Asia’s biggest car maker, earlier this month raised its profit forecast for the year ending March 2014 to 1.48 trillion yen, as the weaker yen bolsters the value of Japanese cars sold overseas.

The Topix index gained 0.3 percent at 1:33 p.m. The yen was little changed at 97.60 against the dollar.

The trade shortfall was wider than a median forecast of 773.5 billion yen in a Bloomberg News survey of 24 economists. The rise in exports was below a median estimate of a 12.8 percent increase.

The increase in imports (JNTBIMPY) in July exceeded an estimated 16 percent gain and marked the biggest jump since June 2010.

Japan’s dependence on imported fossil fuels shot up after the government shuttered most of the country’s nuclear reactors in the wake of a record earthquake in March 2011.

“Imports aren’t rising in terms of quantity, but prices are going up because of energy costs and the weaker yen,” said Minoru Nogimori, an economist at Nomura Securities Co. in Tokyo.

China Property

Japan’s growth slowed to an annualized 2.6 percent in the April-June period from 3.8 percent in the prior quarter, less than forecast as capital investment fell for a sixth straight quarter. The economy will shrink an annualized 4.3 percent in the three months after the planned tax increase in April before returning to growth, according to the median estimate of economists surveyed by Bloomberg News.

Abe will make the final decision on the tax after revised second-quarter gross domestic product data are released on Sept. 9.

In China, prices of new homes rose in July from a year earlier in 69 of 70 cities, including gains of 17 percent for Guangzhou and 14 percent for Beijing and Shanghai, the National Bureau of Statistics reported yesterday. All three cities had the biggest gains since a change in methodology in January 2011.

Thailand Slows

The heat in the property market contrasts with an economic slowdown. While policy makers are concerned at housing becoming unaffordable, Nomura Holdings Inc. economist Zhang Zhiwei said today that “the government has no choice but to tolerate rising property prices in the short term” amid constraints on growth.

Elsewhere in Asia, Thailand’s economic growth slowed for a second quarter as exports cooled and local demand weakened, with rising household debt restricting the scope for monetary easing.

Thai gross domestic product increased 2.8 percent in the three months through June from a year earlier, after expanding a revised 5.4 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. The median of 16 estimates in a Bloomberg survey was 3.3 percent.

To contact the reporters on this story: James Mayger in Tokyo at jmayger@bloomberg.net; Andy Sharp in Tokyo at asharp5@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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