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Japan's exports accelerate in May, surplus with US lowest since 2013

Japan's exports are likely to continue to grow thanks to increased demand for manufacturing equipment, cars and car parts.


JAPAN'S exports rose in May at the fastest rate in four months thanks to increased shipments of cars, car parts, and semiconductor equipment, a sign that global demand is gaining strength.

Exports rose 8.1 per cent in May from the same period a year ago, more than the median estimate for a 7.5 per cent annual increase expected by economists in a Reuters poll. In April, exports grew an annual 7.8 per cent.

Exports are likely to continue to grow thanks to increased demand for manufacturing equipment, cars and car parts, but Japan's trade surplus with the United States makes it a potential target for US President Donald Trump's protectionist policies.

Japan's exports to the United States rose 5.8 per cent year-on-year in May, faster than a 4.3 per cent year-on-year growth in April, due to higher shipments of car parts.

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Imports from the United States rose 19.9 per cent year-on-year as imports of US aircraft and coal grew.

As a result, Japan's trade surplus with the United States fell 17.3 per cent year-on-year to 340.7 billion yen (S$4.2 billion), the lowest such surplus since January 2013.

The decline in the trade surplus with the United States is unlikely to exempt Japan from White House criticism as President Donald Trump's administration raises tariffs to lower the US trade deficit and combat what it says are unfair trade policies.

Mr Trump is pushing ahead with hefty tariffs on US$50 billion of Chinese imports, and China's Commerce Ministry has said it would respond with tariffs "of the same scale and strength", sparking fears of a full-blown trade war.

Mr Trump has imposed tariffs on steel and aluminium imports, which affect Japanese companies, and has also criticised Japan for its low level of imports of American vehicles.

"Exports will continue to recover, but I am a little worried about the pace of growth," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

"Friction between the United States and China on trade policy could impact Japan. This is a risk factor for Japan and for global trade." In terms of volume, which strips out the impact of currency moves, Japan's exports rose an annual 4.2 per cent in May versus a 4.6 per cent annual increase in the previous month.

Japan's overall imports rose 14 per cent in the year to May, versus the median estimate for an 8.2 per cent increase, due to the rising price of oil.

The trade balance was a deficit of 578.3 billion yen, versus the median estimate for a 235 billion yen deficit. REUTERS

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