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Japan's June export growth points to sustained economic recovery
[TOKYO] Japan's exports rose for a seventh straight month in June led by shipments of cars and electronics, an indication external demand continues to support a gradual economic recovery and backing the central bank's upbeat economic view.
Ministry of Finance (MOF) data showed on Thursday that exports grew 9.7 per cent year-on-year in June, versus a 9.5 per cent annual gain expected by economists in a Reuters poll. It followed a 14.9 per cent year-on-year rise in the previous month.
The data comes hours before the Bank of Japan ends a two-day rate review, at which it is expected to raise its growth forecasts as robust exports and private consumption heighten prospects of a moderate economic recovery.
However, the central bank is also likely to cut its price forecasts and hold off from expanding stimulus, highlighting a gap between strong growth and weak inflation.
Some analysts say net exports - or exports minus imports - may have trimmed gross domestic product growth in the April-June period as the pace of export growth likely slowed from the previous quarter while imports surged.
Japan's economy grew at an annualised one per cent at the start of this year, posting a fifth straight quarter of growth. Whether it can extend gains depends on the strength of domestic demand, which has been a soft spot in the world's third largest economy, they say.
"The economy likely expanded for a sixth straight quarter in April-June as private consumption and pubic investment probably turned out strong," said Masaki Kuwahara, senior economist at Nomura Securities.
By destination, Japan's exports to the United States rose 7.1 per cent in June from a year ago, posting a fifth straight month of gains, due to increased shipments of cars.
The trade surplus with the United States fell 4.9 per cent to 587.4 billion yen (S$7.19 billion) due as imports jumped 19.3 per cent in the year to June, led by crude oil and coal.
Japan's trade surplus has been a target of criticism by US President Donald Trump's administration, which has called for cutting US trade deficit and boosting exports under his "America First" protectionist policies.
Exports to China, Japan's biggest trading partner, increased 19.5 per cent year-on-year in June, led by shipments of car parts and semiconductor production equipment.
In terms of volume, Japan's overall exports rose 4 per cent, up for a fifth consecutive month.
Japan's imports rose 15.5 per cent in the year to June, versus the median estimate for a 14.6 per cent annual gain, led by coal and liquefied natural gas, bringing the trade balance in a surplus of 439.9 billion yen.