Daily Management Review

Despite Risks Posed by U.S. Protectionism, Japan Notes Uptick in Exports for the First Time in 15 Months


01/25/2017




Despite Risks Posed by U.S. Protectionism, Japan Notes Uptick in Exports for the First Time in 15 Months
Even as U.S. protectionism threatens to hurt trade across the region and dent external demand, in a positive sign for the export-reliant economy, Japan's exports rose for the first time in 15 months in December on strong sales of electronics and car parts.
 
Compared with a 1.2 percent annual increase expected by economists in a Reuters poll, Ministry of Finance data showed on Wednesday that exports rose 5.4 percent year-on-year in December. In November there was a 0.4 per cent annual decline in the figures.
 
Underlining a pickup in external demand and scoring a uptick for a second straight month, shipments in terms of volume also rose 8.4 percent from a year earlier.
 
At a policy review next week on prospects of improving global growth, the Bank of Japan is seen maintaining an upbeat view on the world's third largest economy and the trade data should be welcome news for the bank.
 
However, as U.S. President Donald Trump formally withdrew the United States from the Trans-Pacific Partnership trade deal on Monday and distanced America from its Asian allies, worries about protectionism under Trump have raised uncertainty over the outlook.
 
"Global demand is firming up as emerging markets in Asia are catching up with a recovery in advanced economies," said Takeshi Minami, chief economist at Norinchukin Research Institute.
 
"If debate on protectionism leads to an unwelcome rise in the yen, that would dampen the momentum towards a pickup in Japan's exports though."
 
However, dismissing concerns that protectionism could spread and undermine global trade, BOJ Governor Haruhiko Kuroda last week offered an upbeat view on the U.S. and world economy.
 
The BOJ’s board is set to conduct a quarterly review of projections on Jan. 30-31 and if Kuroda's optimism on global recovery prospects is any suggestion, it is likely to stick to the positive outlook.
 
Noting the first increase in 10 months led by shipments of automobiles and car parts, the MOF data showed that the value of exports to the United States, Japan's second largest trading partner, rose 1.3 percent year-on-year in December.
 
Helped by shipments of car parts and electronics equipment, a record amount was touched in Japan’s exports to China, it's largest trading partner, which rose 12.5 percent in December to 1.3 trillion yen ($11.44 billion).
 
Help BOJ’s quest to beat years of deflation and anemic growth and the creation of a a positive sign for Japan's export-driven economy is provided by the increase in exports to both the major markets of the U.S. and China.
 
Exports were boosted by the fall in the yen at the end of last year, analysts noted.
Noting that the trade balance will move into deficit later next year as indicated by the expectation that the yen could weaken to 130 on the dollar by end-2017, compared to 113 in Wednesday morning trade, said Capital Economics senior Japan economist Marcel Thieliant.
 
A trade surplus of 641.4 billion yen - the fourth straight month of surpluses, resulted from the fall in imports of 2.6 percent in the year to December, versus the median estimate for a 0.8 percent annual decrease, the data showed.
 
(Source:www.reuters.com) 






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