Japan's Trade Surplus Rises 73.9% in March, Beating Forecasts

Tuesday, 24 Apr 2007 | 9:29 PM ET

Japan's trade surplus rose more than expected in March from a year earlier as exports climbed despite a slowdown in the U.S. economy, data showed on Wednesday. Also behind a sharp expansion in the surplus was a slowdown in growth of imports, largely due to falling crude oil prices and a fall in imports of clothing from China.

The customs-cleared trade surplus rose 73.9% in March from a year earlier to 1.6335 trillion yen ($13.78 million), above economists' median forecast for a surplus of 1.3458 trillion yen, data from the Ministry of Finance showed.

"Exports are strong despite a slowdown in the U.S. economy, which shows that Japan's economy continues to get solid support from external demand," said Noriaki Haseyama, an economist at Dai-ichi Life Research Institute.

"Judging from the data, external demand is likely to have contributed slightly to overall economic growth in the January-March quarter," he said.

Some economists have been wary that a slowdown in the U.S. economy, which is still largely limited to a housing sector correction, could dent U.S. demand for Japanese goods.

Exports, which accounts for around 15% of Japan's economic activity, grew 10.2% from a year earlier to a record 7.51 trillion yen, thanks to rises in shipments of automobiles and semiconductors. That matched economists' median forecast of a 10.1% rise.

Exports to the United States, Japan's largest export destination, grew 2.4% from a year earlier, rising for the 26th straight month.

Financial markets showed a limited reaction to the data.

Exports to China, now Japan's biggest trading partner, climbed 15.1% to 1.12 trillion yen.

A weak yen may have given a boost to exports. The average dollar/yen rate for March was 118.49 yen, compared with 117.45 yen in March last year.

Imports in March were flat from the year before at 5.88 trillion yen, compared with a market consensus of a 4.5% increase. The value of crude oil imports fell 5.4%, reflecting a downturn in crude oil prices.

On a seasonally adjusted basis, the overall trade surplus increased 79.1% from the previous month to 1.123 trillion yen, the data showed.

Japan's economy, the world's second-largest, is growing steadily but economists expect growth to slow in January-March.

A Reuters poll showed last week that Japan's economy is expected to have grown 0.4% in the first three months of this year, down from 1.3% growth in October-December.


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