Asia-Pacific News

Japan's April exports climb 8.0% on-year, topping expectations

Robot assembler work on cars during the assembly process at Nissan Motor Company's Kyushu Plant on November 23, 2007 in Kiyakyushu, Japan.
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Japan's April exports climbed 8.0 percent from a year earlier, data showed on Monday, topping expectations for a 6.4 percent rise and underscoring a gradual recovery in external demand.

But imports fell more than expected, down 4.2 percent on-year, compared with expectations for a 1.5 percent decline.

The trade balance came to a deficit of 53.4 billion yen ($439.3 million), versus the median estimate for a 318.9 billion yen deficit. In March the trade balance had marked the first surplus since June 2012.

Following the trade data, the Japanese yen traded unchanged, with the U.S. dollar fetching 121.55 yen. The Nikkei, meanwhile, hit a fresh 15-year high at the start of trade.

The data come just days after the International Monetary Fund (IMF) warned the Bank of Japan (BOJ) that the central bank's forecasts for hitting its 2 percent inflation target are likely "overly optimistic." The IMF also urged the country to speed up its efforts at fiscal reform rather than over relying on yen weakness.

The BOJ has pushed back its timeline for hitting its inflation target to around September 2016. Japan's core consumer price index (CPI) for March rose 2.2 percent from a year earlier, but excluding the effects of a consumption sales tax hike in April 2014, the nationwide consumer price index (CPI) rose 0.2 percent.

"The exports numbers continue to reinforce our view that the growth component of Japan is starting to improve. The structural reform process is clearly going to be tough and slower, but we're now forecasting that exports will be 33 percent of Japan's growth (from the current 29 percent) from now through to 2019," said Martin Lakos, a director with Macquarie.

"We're not expecting the lights to be blown out or shot up in terms of growth but we're looking for positive growth for the next three years from now till 2017, in the region from now up till about 1.5-2 percent," he added.

Weaker oil behind Japan's falling imports: UOB
Weaker oil behind Japan's falling imports: UOB

Other were more focused on whether Japan would again return to near-permanent trade deficits. In March, Japan recorded its first trade surplus in three years.

The fall in import prices is largely the result of a sharp fall in the cost of natural gas imports, which plunged in April by 12% from March, Capital Economics' Japan economist Marcel Thieliant said in a note.

"However, if the exchange rate starts to weaken again in the second half of the year as we expect, crude oil imports will become more expensive again, soon. Overall, therefore, the trade balance will likely remain in the red in coming months," he said.

In the meantime, the Japanese economy has continued to recover from a technical recession triggered by the consumption tax hike in April 2014.

Last Wednesday, government data showed that the Japanese economy expanded at its fastest pace in a year.

Gross domestic product (GDP) grew at an annualized 2.4 percent on the previous quarter, beating economists' consensus of a 1.5 percent expansion. On a quarter-on-quarter basis, GDP grew 0.6 percent in the first three months of this year.

In the October-December quarter, the economy expanded 1.5 percent on-quarter after contracting in both the second and third quarters of 2014.