Japan announced yesterday its biggest monthly trade surplus in a year, supporting hopes that the world’s second-largest economy is slowly recovering from its worst recession on record.
Exports exceeded imports for a fourth straight month, giving a vital boost to an economy that is heavily dependent on overseas demand, government data showed.
Japan logged a trade surplus of ¥299.8 billion (US$3.2 billion) for last month, beating expectations for a figure of ¥214 billion, data from the finance ministry showed.
While the surplus was 12.1 percent smaller than a year earlier it was the biggest since an excess of ¥341.1 billion logged in May last year.
Japan’s industrial production is recovering as orders from overseas increase, said Hiromichi Shirakawa, chief Japan economist at Credit Suisse.
“Japan’s economy is now entering a recovery phase but is likely to slow after this,” Shirakawa said. “It’s hard to believe the world economy will stage a sustainable V-shape recovery.”
Japan’s domestic demand remains weak and companies are likely to continue to curb spending on plants and equipment, he said.
Global demand for Japan’s cars, electronics and other exports plunged during the global economic downturn, but there are hopes that the worst of the slump is over.
Exports were down 40.9 percent last month from a year earlier, having recovered somewhat from a record year-on-year fall of 49.5 percent in February. Imports sank 42.4 percent last month on lower prices of crude oil and raw materials.
“Exports will likely continue to rebound” in the next few months, said Hiroshi Watanabe, economist at the Daiwa Institute of Research.
“The export recovery will boost industrial production at home. The problem is what will happen after that,” he said.
“Japan’s main exports are automobiles and electronics — in other words, durable goods for US and European consumers. I do not expect demand for them to grow much in the future,” he said.
The trade surplus with the US was down 52.9 percent last month from a year earlier while that with the EU slid 75.4 percent. The deficit with China shrank to ¥860 million from ¥40.5 billion a year ago.
“We do not expect much improvement in exports destined for the US and Europe, but we do expect a recovery in China’s domestic demand to help Japan’s cyclical recovery,” UBS analysts wrote in a research note.
Japan’s economy contracted less than initially thought in the first quarter of this year, but still logged its sharpest contraction on record, shrinking an annualized 14.2 percent, the government reported earlier this month.
Japanese Finance Minister Kaoru Yosano said last week that Asia’s biggest economy hit bottom in the January-March quarter.
Adding to hopes of a recovery, factory output in April rose 5.9 percent, the fastest monthly jump in more than half a century, recent figures showed.
Barclays Capital said in a commentary it believed “exports will continue to follow a moderate recovery trend, led by demand from Asia, especially China.”