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Japan reports shrink in trade surplus, but exports rise

Japan's trade surplus fell for the fourth straight month last month as surging oil prices inflated imports to a record high, the finance ministry said yesterday.

But economists found reason for cheer in the figures, which showed a rise in exports from the world's second-largest economy.

The trade surplus fell 22.6 percent from a year earlier to ?873.57 billion (US$7.9 billion), with imports rising 11.6 percent to a record ?4.66 trillion, while exports rose 4.3 percent to ?5.54 trillion.

Imports of crude oil jumped 48.5 percent from a year earlier, the ministry said.

It was the fourth consecutive month that the trade surplus has declined, but was nevertheless above the average market expectation of ?755.1 billion.

Economists voiced optimism about exports, saying they were slowly picking up momentum, with the latest figure the second-highest level on record.

"With the most recent round of inventory adjustments in the IT sector almost coming to a close, exports are beginning to gain stronger momentum than recent months," said Junichi Makino, economist at Daiwa Institute of Research.

Exports of electronic products declined by only 1.4 percent last month from the year earlier period, compared to a 6.3 percent drop in June and 9.1 percent in May.

Economists are painting a brighter picture of the world's No.2 economy, with the government and Bank of Japan saying it is emerging from a lull.

Takahide Kiuchi, senior economist at Nomura Research Institute, said the improvement in exports to the EU and China, which had been weak, would overturn the notion that "weak exports are threatening Japan's economy."

Japan's trade surplus with Asia fell 9.8 percent to ?676.2 billion with exports rising 2.5 percent to ?2.70 trillion and imports expanding 7.3 percent to ?2.02 trillion.

The trade surplus with the US increased by 2.2 percent to ?650.8 billion. US-bound exports increased 4.3 percent to ?1.25 trillion and imports rose 6.6 percent to ?600.0 billion.

With the EU, the surplus rose 7.4 percent to ?264.4 billion as exports rose 1.0 percent to ?785.8 billion with imports falling 2.0 percent to ?521.5 billion, the ministry said.
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