23/06/2003 13:28
Japan's exports held up in May thanks to demand from China but the slowing pace of growth stirred worries about how much longer sales of cars and electronics overseas can be counted on to drive the economy.
The Ministry of Finance said on Monday that exports rose 3.5 percent in May, down from a 4.8 percent rise in April and below a median forecast in a Reuters poll of a rise of 5.0 percent.
With domestic demand so slow, Japan has relied on exports to keep its economy ticking over but concern about conditions in its major markets has kept a lid on growth in recent months.
"Exports to the United States, especially of cars, are continuing to decline but those to Asia and EU are cushioning the impact," said Kenji Arata, economist at MCM Asia Pacific.
In a clear indication of the change in Japan's trading patterns, exports to China rose 29 percent while those to the United States, still Japan's largest single market, fell 4.9 percent, the fifth straight month of decline.
Demand remained strong in China for products such as car parts, components for audio visual equipment and electronics goods to feed fast-growing manufacturing industries.
Asia's SARS outbreak, which affected China the most in terms of number of people affected, did not have as big an effect on Japan's exports as many had feared, and the strong demand cut Japan's trade deficit with China by 28.0 percent.
A ministry official told a briefing there had been cases of Japanese plants in China closing because of SARS cases among the workforce, but many companies also said the illness had had no effect on business.
FOREX TOO
"There are a number of things that affect Japan's trade, such as exchange rates and economic conditions, so it is difficult to say clearly what was the effect of SARS," the official said.
Worried that the economy could be stalled by a strong yen that would make exports expensive, Japanese authorities have been intervening heavily in the currency market this year to prevent the currency from rising against the dollar.
In terms of volume, overall exports grew at 2.5 percent in May, down from 7.1 percent growth the previous month and well below the 19 percent recorded in November, a figure that had raised hopes of a pick-up in Japan's economy.
Imports rose 2.0 percent year-on-year and gained 2.5 percent month-on-month, pushing Japan's customs-cleared basis trade surplus up 12.5 percent to 694.4 billion yen ($5.86 billion) -- well above a median forecast of 616.5 billion yen in a poll of economists by Reuters journalists.
Some economists said, however, that it might be too early to trumpet this as good news, given that the U.S. economy has yet to show strong growth signs and the effects of SARS may still take some time to come through.
"The surplus with the U.S. is minus so exports to Asia probably supported Japan's trade surplus in May," said Shuji Shirota, an economist at Dresdner Kleinwort Wasserstein.
"But the impact of SARS will gradually appear so I don't think external demand will support the Japanese economy like last year," Shirota said.
The trade surplus with the United States fell 1.0 percent in May from a year earlier. Exports to European Union nations rose 12.2 percent. The trade surplus with the EU rose 29.6 percent. ($1=118.49 yen)
The Ministry of Finance said on Monday that exports rose 3.5 percent in May, down from a 4.8 percent rise in April and below a median forecast in a Reuters poll of a rise of 5.0 percent.
With domestic demand so slow, Japan has relied on exports to keep its economy ticking over but concern about conditions in its major markets has kept a lid on growth in recent months.
"Exports to the United States, especially of cars, are continuing to decline but those to Asia and EU are cushioning the impact," said Kenji Arata, economist at MCM Asia Pacific.
In a clear indication of the change in Japan's trading patterns, exports to China rose 29 percent while those to the United States, still Japan's largest single market, fell 4.9 percent, the fifth straight month of decline.
Demand remained strong in China for products such as car parts, components for audio visual equipment and electronics goods to feed fast-growing manufacturing industries.
Asia's SARS outbreak, which affected China the most in terms of number of people affected, did not have as big an effect on Japan's exports as many had feared, and the strong demand cut Japan's trade deficit with China by 28.0 percent.
A ministry official told a briefing there had been cases of Japanese plants in China closing because of SARS cases among the workforce, but many companies also said the illness had had no effect on business.
FOREX TOO
"There are a number of things that affect Japan's trade, such as exchange rates and economic conditions, so it is difficult to say clearly what was the effect of SARS," the official said.
Worried that the economy could be stalled by a strong yen that would make exports expensive, Japanese authorities have been intervening heavily in the currency market this year to prevent the currency from rising against the dollar.
In terms of volume, overall exports grew at 2.5 percent in May, down from 7.1 percent growth the previous month and well below the 19 percent recorded in November, a figure that had raised hopes of a pick-up in Japan's economy.
Imports rose 2.0 percent year-on-year and gained 2.5 percent month-on-month, pushing Japan's customs-cleared basis trade surplus up 12.5 percent to 694.4 billion yen ($5.86 billion) -- well above a median forecast of 616.5 billion yen in a poll of economists by Reuters journalists.
Some economists said, however, that it might be too early to trumpet this as good news, given that the U.S. economy has yet to show strong growth signs and the effects of SARS may still take some time to come through.
"The surplus with the U.S. is minus so exports to Asia probably supported Japan's trade surplus in May," said Shuji Shirota, an economist at Dresdner Kleinwort Wasserstein.
"But the impact of SARS will gradually appear so I don't think external demand will support the Japanese economy like last year," Shirota said.
The trade surplus with the United States fell 1.0 percent in May from a year earlier. Exports to European Union nations rose 12.2 percent. The trade surplus with the EU rose 29.6 percent. ($1=118.49 yen)
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