Japan: Exports decelerate amid weaker demand from the U.S. and Europe
November 25, 2010
Export growth continues to moderate amid weaker demand from developed economies, a stronger yen and the gradual fading of the favourable base effect. In October, export growth moderated for the eighth consecutive month to expand 7.8% year-on-year in nominal terms, driving exports to JPY 5.7 trillion (USD 69.9 billion). The figure came in below market expectations, which had exports rising 10.6%. The deceleration was the result of weak growth in exports to the U.S. and Europe, which remained virtually unchanged over the previous year. In contrast, exports to Asia continued to rise, in particular to China (+17.5% yoy), Japan's most important trading partner. At the production level, exports were underpinned by sales of industrial machinery (+31.1% yoy), while growth in exports of transport equipment weakened markedly (+4.2% yoy). Imports also decelerated, down from a 10.0% expansion in September to a 8.7% increase in October. As a result, the trade surplus improved from JPY 791 billion (USD 9.4 billion) in September to JPY 822 billion (USD 10.0 billion) in October. Despite the vigorous recovery observed in recent months, exports remain below pre-crisis levels, with the 3-month average at JPY 5.6 trillion in October. This is well below the JPY 7.4 trillion peak reached in December 2007.