Friday, June 25, 2004
Japan's export growth rate slips below 10%
Barney Jopson / Tokyo June 25, 2004
Japanese exports reached a record high in May but their rate of expansion slipped below 10 per cent for the first time this year, suggesting the external demand cycle may have peaked.
Exports increased by 9.8 per cent from a year ago to ¥4,720 billion ($43.18 billion, ?35.7 billion, £23.7 billion) while imports rose 4.9 per cent to ¥3,790 billion, boosting Japan's trade surplus by 35.5 per cent, its 11th consecutive monthly rise.
Signs of slowing exports would have little bearing on the short-term outlook for the country's recovery, economists said, because the upward trend in shipments remained firm and domestic consumption and investment were increasingly powerful sources of economic growth.
Exports to China increased by 21.4 per cent to ¥642 billion, maintaining their recent growth even as the Beijing authorities took measures to slow rapid investment in the country.
"As of May these tightening measures have not dramatically slowed Japan's aggregate shipments to China," said Kiichi Murashima, economist at Nikko Citigroup.
"However, in certain areas such as construction machinery and iron and steel, a clear negative impact has appeared."
South Korea and Taiwan underlined their status as crucial sources of demand. Exports to the two markets grew by 26.8 per cent and 22.4 per cent respectively and combined to outstrip the value of shipments to China.
Exports to the US dropped 7 per cent to ¥1,037 billion in spite of its strengthening economy. Surging overseas shipments kick-started Japan's economic recovery in 2003, and monthly export growth eventually reached a high of 13.2 per cent this March before slowing to 10.8 per cent in April.
Some observers argue that even if exports were to drop sharply, domestic demand would remain strong enough to support continued growth.
The Bank of Japan last week gave its most upbeat economic assessment for more than a decade, saying, "Japan's economy is expected to continue to recover, gathering strong momentum."
Import figures did not help resolve uncertainty over how they would be affected by high oil prices. Oil imports fell year on year in May, because of a price rise last year caused by the war in Iraq, but economists said that if prices stayed high for the rest of 2004, Japan's import bill would almost certainly rise.