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Japan exports roar ahead in January, trouncing forecasts

A worker walks through the assembly area at the East Japan Railway's Shinkansen General Rolling Stock Center in Rifu, Miyagi Prefecture, Japan.
Tomohiro Ohsumi | Bloomberg | Getty Images
A worker walks through the assembly area at the East Japan Railway's Shinkansen General Rolling Stock Center in Rifu, Miyagi Prefecture, Japan.

Japanese exports surged in January, providing fresh evidence that the world's third largest economy is turning a corner following a grinding recession.

Exports rose by an impressive 17 percent on year last month, the biggest jump since late 2013, beating expectations for an 11.9 percent rise forecast in a Reuters poll.

Imports for the month fell 9.0 percent from a year earlier, a bigger-than-expected drop compared with a Reuters poll forecast for a 4.8 percent drop, reflecting multi-year low oil prices.

"The upturn in the U.S. economy, coupled with the weaker yen, is supporting export growth," Moody's Analytics said in a note before the data's release. In December, exports rose 12.9 percent from the year-earlier period, the quickest pace in a year.

Export growth was robust across all geographies; shipments to Asia, the U.S. and Europe rose by 22.7 percent, 16.5 percent and 7.4 percent respectively.

The export sector has emerged as a key driver of Japan's recovery, helping the economy crawl out of a recession in the fourth quarter. The economy grew an annualized 2.2 percent in the three months to December, rebounding from a technical recession in the third quarter.

"This is a positive result for Japanese economy. Exports will continue to support economic growth in 2015, although private investment has also started to pick up and will have an important contribution to the economy," said Tomo Kinoshita, chief Japan economist at Nomura.

Kinoshita, however, warned that February's export data may not match January's strength.

Shipments to China will likely slow this month due to the Lunar New Year holiday which falls on February 18-19, Kinoshita said. For a couple weeks prior to the holiday, factories begin to shut down, resulting in a slowdown in demand for overseas goods. Japan's main exports to China include machinery, electronics and materials such as steel and chemicals.

Nevertheless, with overseas demand picking up and the yen weak, exports will continue to be a relative bright spot this year, he said.

"Yen depreciation has really made Japanese products more competitive, particularly within Asia, where exports are often transacted in yen," he said.

The yen weakened around 14 percent against the U.S. dollar in 2014, following an over 20 percent decline in the previous year.