Posted on 26 Oct 2011
Japan's exports rose at a slightly faster pace than expected in the year to September, Ministry of Finance data showed on Monday, but the global slowdown and the strong yen are clouding the outlook for the economy's recovery from the March disasters.
KEY POINTS:
Exports rose 2.4 percent in September from a year earlier, compared with a median forecast for a 1.0 percent increase and following a 2.8 percent rise in the year to August.
Imports increased 12.1 percent in September, against a forecast of a 12.6 percent rise.
The trade balance turned to a surplus of 300.4 billion yen ($3.95 billion).
That followed a deficit in the previous month and compared with a median forecast of a 198.8 billion yen surplus.
Exports to Asia, which account for more than half of Japan's total exports, rose 0.2 percent from a year earlier.
Exports to the United States were up 0.4 percent.
COMMENTARY:
YOSHIKI SHINKE, CHIEF ECONOMIST, DAIICHI LIFE RESEARCH INSTITUTE
"The pace of recovery in exports is clearly slowing, and I'm not too optimistic about the outlook. The impact from slowing global growth will be felt more strongly, as well as the effect of yen rises.
"The Bank of Japan will likely stand pat this week. If it were to ease, it would be in response to sharp yen rises. Much will depend on how stocks and the yen perform this week.
"Japan may intervene in the currency market if dollar/yen stays sustainably below 76 or falls below 75. Unless it intervenes, the yen may continue to rise and verbal warnings alone may not be able to reverse that trend."
BACKGROUND:
The Japanese economy likely rebounded in the third quarter from the damage caused by a devastating March earthquake, but is expected to slow to a crawl in the final quarter due to an intensifying euro zone debt crisis that threatens to drag down the world economy, according to a Reuters poll.
The Bank of Japan will probably cut its economic forecasts because of slowing global growth but keep monetary policy unchanged at a rate review on Thursday, unless European debt crisis talks this week disappoint and trigger market upheaval.
Euro zone leaders are striving to agree on new steps to reduce Greece's debt, strengthen the capital of banks with exposure to troubled euro zone sovereigns and leverage the euro zone's rescue fund to stem contagion to bigger economies. ($1 = 76.130 Japanese Yen)
