Japan: Export growth continues to moderate albeit less than expected
October 25, 2010
The extraordinary growth in exports observed since the beginning of the year is slowing, reflecting the sustained strengthening of the Japanese yen in foreign exchange markets along with the gradual fading of the favourable base effect. In September, exports decelerated for the seventh month in a row to a 14.4% annual expansion in nominal terms to reach JPY 5.8 trillion (USD 69.0 billion). The figure, nonetheless, came in above market expectations of exports growing only 9.6%. Exports continued to benefit from strong sales of transport equipment (+16.4% year-on-year), which represents nearly a quarter of total exports. Moreover, increased exports of industrial machinery (+39.0% year-on-year), in particular to China and emerging Asia, contributed significantly to this month's figure. Meanwhile, imports moderated sharply, slowing from a 17.9% expansion in August to a 9.9% increase in September. Consequently, the trade surplus improved from JPY 86 billion (USD 1.0 billion) in August to JPY 797 billion (USD 9.9 billion) in September. Despite the vigorous recovery observed in recent months, exports remain below pre-crisis levels, with the 3-month average at JPY 5.7 trillion in September, still well below the peak of JPY 7.4 trillion reached in December 2007.