TOKYO – Japan’s exports grew for a fourth consecutive month as the weak yen provided a tailwind, and demand in China picked up, giving the economy a needed boost as domestic consumption sags.
Exports gained 7.3 per cent in March from a year earlier, with growth slightly decelerating from February’s 7.8 per cent gain, Japan’s finance ministry reported on April 17.
Economists had forecast a 7 per cent increase. Imports fell 4.9 per cent, compared with the consensus estimate of a 5.1 per cent decline.
The figures showed that the economy continues to benefit from the effects of the sliding yen, which averaged 149.45 to the US dollar in the latest month, 10.7 per cent weaker than 134.97 in the previous year, the ministry said. That helped inflate the value of some shipments in yen terms. By volume, exports declined by 2.1 per cent.
“I feel that the March exports growth was largely due to the currency factor, and exports are not that strong,” said senior economist at Mizuho Research & Technologies Yayoi Sakanaka. “Semiconductors are picking up, but not yet in terms of volume.”
The currency impact may continue to sustain growth in exports in coming months, as the yen has extended losses. Japan’s currency continues to trade around fresh 34-year lows, prompting objections from the authorities.
Among industries leading the gains in March were the automakers and semiconductor and electronic parts sectors, which saw increases of 7.1 per cent and 11.3 per cent, respectively.
By region, shipments to the United States increased 8.5 per cent, while those to Europe advanced 3 per cent.
China saw a 12.6 per cent jump, accelerating from 2.5 per cent in February, as businesses ramped up operations following the Chinese New Year holidays, helping to power the country’s 5.3 per cent economic growth in the January to March quarter.
Japan’s growth in shipments comes against the backdrop of a somewhat shaky environment for global commerce overall.
Worldwide trade is advancing little by little, with the Goods Trade Barometer managed by the World Trade Organisation reaching 100.6 last month. That is slightly above the trend baseline, indicating weak upward momentum, but various risks to the outlook persist.
“Merchandise trade should continue to recover gradually in the early months of 2024, but any gains could be easily derailed by regional conflicts and geopolitical tensions,” the global organisation said in March.
Japanese exporters are monitoring demand prospects in their key overseas markets. US Federal Reserve chair Jerome Powell signalled on April 16 that policymakers will wait longer than previously anticipated to cut interest rates following a series of surprisingly high inflation readings.
The continued growth in shipments may help Japan record a modest economic expansion in the first quarter of 2024, offsetting the impact of stagnant domestic demand.
Japan narrowly avoided a recession in the previous period, with anaemic private consumption exerting a drag.
The world’s fourth-largest economy is projected to record a small expansion again in the January to March quarter, according to a Bloomberg survey. BLOOMBERG
