Japan’s exports grew for a fourth month in March, evidence that sustained gains in overseas demand are fueling the recovery as prices slump at home.
Shipments abroad advanced 43.5 percent from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 14 economists surveyed by Bloomberg News was for a 45.4 percent gain.
Accelerating growth in developing Asia is prompting companies including Mitsubishi Electric Corp. to expand abroad and helping sustain what the International Monetary Fund terms a “tentative” Japanese recovery. The IMF late yesterday said the Bank of Japan, which meets next week, must be ready to inject more stimulus should the rebound fail to stem deflation.
“A V-shaped recovery is taking place in exports and it’s been continuing for longer than expected because of solid demand from emerging nations,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “A favorable cycle toward a full-fledged recovery is firmly under way.”
The yen rose to 92.90 per dollar at 9:48 a.m. in Tokyo from 93.02 before the report, as its allure as a refuge from banking turmoil was boosted by prospects U.S. President Barack Obama will call for new financial rules. The currency’s gains helped to send the Nikkei 225 Stock Average 1.7 percent lower.
Japan posted a trade surplus of 948.9 billion yen ($10.2 billion) in March, narrower than the median prediction for a 1.02 trillion yen gap, the Finance Ministry said. Imports rose 20.7 percent.
The improvement in overseas shipments last month was partly due to a favorable year-on-year comparison. In March 2009, shipments abroad tumbled 45.5 percent as global trade froze in the aftermath of the collapse of Lehman Brothers Holdings Inc. in the previous September.
The value of shipments abroad totaled 6 trillion yen last month, lower than their peak of 7.7 trillion yen in March 2008. From a month earlier, March exports were unchanged on a seasonally adjusted basis, today’s report showed.
“Asia, especially China, has been very strong, and the U.S. is coming back as well,” Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo, said before today’s report. Still, he added that “it will take a little more time” to return to pre-crisis levels.
Led by Asia
Shipments to the U.S. grew 29.5 percent in March from a year earlier, while sales to Europe increased 26.7 percent, the ministry said. Exports to Asia advanced 52.9 percent, with those to China climbing 47.7 percent.
Japanese companies are tapping Asia’s accelerating growth. Mitsubishi Electric wants to boost revenue from products such as factory automation and power plant gear in fast-growing economies including China and India to 40 percent of sales from 34 percent, President Kenichiro Yamanishi said this month.
Marubeni Corp., a Tokyo-based trading house, said this month it will start making synthetic rubber for tires in India, partnering with state-run Indian Oil Corp. and TSRC Corp. of Taiwan to benefit from rising auto demand.
The IMF yesterday raised its 2010 growth forecast for India to 8.8 percent and projected a 10 percent expansion in China. Japan will grow 1.9 percent, faster than the previous 1.7 percent estimate, the IMF said. The world’s second-largest economy shrank 5.2 percent in 2009, the steepest contraction in the postwar era.
Beams of Light
Bank of Japan Governor Masaaki Shirakawa said this week that the risk of another recession has “pretty much gone.” His deputy, Kiyohiko Nishimura, said yesterday that the central bank will keep its accommodative policy even as “beams of light are starting to break through a thick cloud of deflation.”
The policy board expanded a credit program for lenders to 20 trillion yen last month and next meets April 30. It has kept the benchmark interest rate at 0.1 percent since December 2008.
Recent data show the expansion is spreading to households. The unemployment rate held at its lowest level since March 2009 in February and consumer confidence surged to a two-year high in March.
“Overseas demand will form the backbone of the recovery, but the bright spots of the domestic economy will continue to spread,” said Dai-Ichi’s Shinke.