Japan's export growth slows sharply in March

Weak yen failed to boost exports: Economist

Japan's exports growth slowed sharply in March, raising concerns that external demand remains weak even as the economy braces for the impact of a sales tax hike.

Exports rose 1.8 percent in March from a year earlier, data on Monday showed, well below analyst expectations in a Reuters poll for a rise of 6.3 percent, and following a 9.8 percent annual gain in February.

Imports in the world's third largest economy rose 18.1 percent on year, above analyst forecasts for a rise of 16.2 percent, in a further sign that Japanese consumers front-loaded spending ahead of a rise in the consumption tax at the start of April.

Japan's trade deficit meanwhile logged another record number, standing at 1.45 trillion yen ($14.14 billion) in March.

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Bank of Singapore Chief Economist Richard Jerram told CNBC that the weaker-than-expected export numbers suggested weakness in the yen was failing to have a significant impact on the export sector.

The yen weakened about 20 percent against the U.S. dollar last year amid aggressive monetary stimulus from the Bank of Japan. It fell to a three-week low of 102.61 per dollar earlier on Monday.

A container ship sits berthed next to gantry cranes at a shipping terminal in Tokyo, Japan.
Tomohiro Ohsumi | Bloomberg | Getty Images

"Exports have been really disappointing when you look at how much the currency has moved," Jerram said. "So companies essentially have not changed overseas prices and are not trying to get market share."

He added: "Ahead of the sales tax increase, maybe some companies diverted production to meet that surge in domestic demand. I don't think this is necessarily the beginning of a new trend."

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Japan's consumption tax rose to 8 percent from 5 percent at the start of this month.

Japanese shares showed little immediate impact to the trade data, with the benchmark stock index rising almost a quarter of a percent at the open.