By Miwa Suzuki (AFP) – Jun 23, 2010
TOKYO — Japan logged a smaller-than-expected rise in its May trade surplus as the slowest export growth in five months signalled that a trade-dependent recovery may be losing steam, data showed Thursday.
Exports for the world's second largest economy rose 32.1 percent to 5.31 trillion yen (59 billion dollars), the sixth consecutive monthly rise, but the increase was below market expectations of 37 percent.
Shipments of cars, steel and electronic components surged in May but the overall increase in exports was below the increase of more than 40 percent registered in each of the previous four months.
The trade surplus reached 324.2 billion yen in May, the 12th straight month of improvement on year-earlier levels but below economists' forecasts of more than 450 billion yen.
Booming demand for automobiles, high tech products and factory parts have combined with a stimulus-driven domestic picture, helping Japan's biggest companies return to profit and drive a tentative recovery.
However, there are anxieties over both the impact of global stimulus withdrawal and European debt on exports, with Japan facing a knock-on effect from falling demand for Chinese goods, analysts say.
"It had been expected that (recent) sharp rebounds in exports would slow," after picking up from the lows seen during the financial crisis, said Hiroshi Watanabe, economist at Daiwa Institute of Research.
But shipments "of Chinese-made products to Europe are slowing due to the weaker euro, which results in lower exports of parts from Japan to China," he said.
"If you look at Japan-EU figures alone, you hardly see an impact of the euro's fall but it is affecting Japanese exports indirectly."
Watanabe added that Japan's exports to China had also slowed due to Beijing's financial tightening as it looks to rein in its economy.
Japan's trade deficit with China ballooned to 58.3 billion yen from 1.9 billion yen a year earlier.
The surplus with the European Union climbed 51.9 percent to 127.3 billion yen, with export growth slowing to 17.4 percent from a 19.9 percent rise in April.
Exporters have eyed Europe cautiously, with the safe-haven yen soaring in recent months on European debt worries, which if sustained will dent exporters' repatriated profits and make their goods more expensive overseas.
Japan's exports have been driven by improving automobile demand following the financial crisis, but a smaller rise in May auto exports "may show German cars are becoming more competitive thanks to the lower euro", Watanabe said.
However, Shinko Research Institute economist Norio Miyagawa told Dow Jones Newswires that May data confirmed exports remained the leading driver of economic growth for Japan. "There's no need to worry about the outlook much."
Imports increased 33.4 percent to 4.99 trillion yen, for the fifth consecutive monthly rise, on higher energy prices.
Japan plunged into a deep recession after the 2008 global financial crisis hit its exports hard. But gross domestic product in the January-March period grew at an annualised 5.0 percent for a fourth straight quarter of expansion.
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