Japan Sustains Export Growth on Yen as EU Shipments IncreaseAlan Wong and Mayumi Otsuma
Japan’s exports rose for a fourth straight month in June as a weak yen made the nation’s products more competitive and shipments to the European Union rebounded.
Exports gained 7.4 percent from a year earlier, the Finance Ministry said in Tokyo today. While the increase was the first for June shipments since 2010, shipping lines slid after the number missed the 10 percent median estimate of economists surveyed by Bloomberg News.
While the yen’s 22 percent decline against the dollar over the past year is helping Prime Minister Shinzo Abe to build momentum for a sustained Japanese recovery, patchy global demand may cap the nation's trade gains. The government yesterday raised its assessment of Japan's economy for a third straight month, after an upper-house election victory that strengthens Abe’s hand for rolling out business deregulation.
“The effect of the yen’s weakness on exports is becoming very clear,” said Junko Nishioka, chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan official. “The outlook for the Japanese economy is improving now and there are more factors to back up an optimistic view than negative factors.”
Imports climbed 11.8 percent, leaving a trade deficit of 180.8 billion yen ($1.8 billion). The yen traded at 99.4 per dollar as of 10:45 a.m. in Tokyo. While the yen’s decline aids exports, it also pushes up the nation’s bill for imports, including the extra energy needed because of nuclear plant shutdowns.
Japan’s shipments to the EU climbed 8.6 percent from a year earlier, the first gain in 21 months, after falling 21 percent in the same month last year. Exports to the U.S. rose 14.6 percent, while those to China gained 4.8 percent.
“Given that the state of the U.S. economy influences Japan’s growth far much more than those of China and Europe, we can be optimistic about the Japanese economy’s outlook as long as the U.S. stays in a good shape,” Nishioka said.
The Topix index fell 0.5 percent as of 10:51 a.m. in Tokyo after a Chinese manufacturing index pointed to a deeper slowdown in Asia’s biggest economy.