Japanese exports up, but surplus shrinks


Japan's exporters depend heavily on the health of the U.S. economy

Staff and wires

TOKYO, Japan -- Japanese exports rose for a fourth straight month in July, but the figures were weaker than expected and the trade surplus narrowed.

The Ministry of Finance said Thursday the customs-cleared trade surplus was 752 billion yen ($6.33 billion), up more than 80 percent from a year ago.

Seasonally adjusted, the trade surplus -- the difference between exports and imports -- narrowed to about $5.67 billion, compared with more than $8.7 billion in June.

While the figures give export-oriented manufacturers a boost, there are worries that the uncertainty about the strength of the U.S. economy may threaten recovery in Japan, the world's No. 2 economy.

Japan has been struggling to throw off the recession of last year.

A strong growth figure in the March quarter suggested a recovery was on track, but some analysts worry that the 1.4 percent GDP jump was a one-off spike and that the June figure, due for release next month, could show a contraction.

Earlier this month the International Monetary Fund warned that Japan could face a short-lived recovery if it did not tackle banking and corporate reform.(Full Story)

Many factors


Exports continue to be the main driver of any recovery in Japan

Weak consumer demand, a high unemployment rate, heavy debts loads among corporates and a lack of progress on structural reform are just some of the factors weighing on the Japanese economy.

A downturn in the U.S. would put even more pressure on the fragile recovery.

The Ministry of Finance said on Thursday that exports in July rose 8.9 percent to 4.395 trillion yen ($37 billion), while imports were up 0.6 percent to 3.643 trillion yen ($30.6 billion).

The surplus fell short of expectations of a forecast of 893 billion yen in a Reuters poll of 15 economists last week.

Exports, the main driver of the recovery, had been expected to rise about 10 percent.

"Exports remain favorable, in this sense continuing to support the economy," Soichi Okuda, senior economist at Aozora Bank, told Reuters news agency.

U.S. economy 'not in good shape'

"That said, there was less of an increase than expected. The yen is getting stronger and the U.S. economy is not in particularly good shape, which had an impact, and this may well continue in the future."

The U.S. dollar is slightly stronger in early Asian trade Thursday, at 119.02 yen. The Japanese stock market is flat near the end of the morning session, with the Nikkei 225 average up just 5 points to 9648, and the broader Topix off 0.12 percent.

The surplus with the United States, Japan's largest trading partner, was 608.8 billion yen, 1.6 percent lower than a year earlier and the first fall in three months.

The trade surplus with other Asian countries jumped to 402.7 billion yen, up for a fifth straight month, while that with the European Union fell 2.5 percent to 105.8 billion yen, the first drop in three months.

First-half increase

For the six months to June, Japan's trade surplus rose 56.8 percent, the first increase in the half-year surplus since July-December 1998.

A recovery in the United States has been the main prop to Japan's economy.

With bonuses expected to keep shrinking, further hobbling consumer spending, most economists see little scope for domestic demand to recover any time soon.

The government has repeatedly marked up its assessment of the economy in the past half year, citing a recovery in exports. But it refrained from an upgrade this month, choosing instead to wait and see whether the U.S. economy begins to slide.

Reuters contributed to this report.