Japan exports up for first time in 15 months, US protectionism poses risks
TOKYO – Japan’s exports rose for the first time in 15 months in December on strong sales of electronics and car parts, a positive sign for the export-reliant economy even as US protectionism threatens to hurt trade across the region and dent external demand.
Ministry of Finance data showed on Wednesday that exports rose 5.4 percent year-on-year in December, compared with a 1.2 percent annual increase expected by economists in a Reuters poll. It followed an annual 0.4 percent decline in November.
Shipments in terms of volume also rose 8.4 percent from a year earlier, up for a second straight month, underlining a pickup in external demand.
The trade data should be welcome news for the Bank of Japan, which is seen maintaining an upbeat view on the world’s third largest economy at a policy review next week on prospects of improving global growth.
However, worries about protectionism under US President Donald Trump have raised uncertainty over the outlook as he formally withdrew the United States from the Trans-Pacific Partnership trade deal on Monday, distancing America from its Asian allies.
“Global demand is firming up as emerging markets in Asia are catching up with a recovery in advanced economies,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “If debate on protectionism leads to an unwelcome rise in the yen, that would dampen the momentum towards a pickup in Japan’s exports though.”
However, BOJ Governor Haruhiko Kuroda last week offered an upbeat view on the US and world economy, dismissing concerns that protectionism could spread and undermine global trade.
Kuroda’s optimism on global recovery prospects suggests the BOJ will maintain its upbeat economic and price forecasts when its board conducts a quarterly review of projections on Jan. 30-31.
In December, the value of exports to the United States, Japan’s second largest trading partner, rose 1.3 percent year-on-year, the first increase in 10 months led by shipments of automobiles and car parts, the MOF data showed.
Exports to China, Japan’s largest trading partner, rose 12.5 percent in December to 1.3 trillion yen ($11.44 billion), a record amount, helped by shipments of car parts and electronics equipment.
The increase in exports to both the major markets of the US and China is a positive sign for Japan’s export-driven economy, and should help the BOJ in its quest to beat years of deflation and anemic growth.
Analysts note the fall in the yen at the end of last year had boosted exports. Capital Economics senior Japan economist Marcel Thieliant said in a note that yen could weaken to 130 on the dollar by end-2017, versus 113 in Wednesday morning trade, meaning the trade balance will move into deficit later next year.