Japanese exports up 12% on year

| January 27, 2010
”Japanese

Japan’s exports jumped for the first time in 15 months in December to reach 5.4 trillion yen (£37 billion) – up 12% compared with a year ago.

Shipments to Asia, which account for more than 50% of Japan’s total shipments, soared by almost a third (31.2%) to 3 trillion yen.

Japan’s exports to China surged 42.8% to 1.1 trillion yen due to a surge in car sales, plastics and organic chemicals.

Meanwhile, Japanese imports fell by 5.5% to 4.9 trillion yen, resulting in a trade surplus for December of 545.3 trillion yen, the Japanese finance ministry said.

There have been concerns in Japan due to a strong yen. While a strong yen is good news for the economy, it makes Japanese exports less competitive – but means imports are more affordable to Japanese consumers. Exports are a key to the economy‘s recovery.

According to analysts, Japan will continue to rely on Asia to fuel its growth in exports.

Takeshi Minami at the Norinchukin Research Institute said: “Most countries around the world are seeing their economies recover but improvements in advanced economies remain fragile.

“We can’t rely too much on strong growth in those countries, so Japanese exports will continue to focus on shipments to Asia.”

Earlier this week, the Bank of Japan elected to keep interest rates on hold at the low level of 0.1%, as widely expected.

It is anticipated that the Bank will leave rates at the low rate until around 2012 as a result of deflationary pressures.

The world’s no.2 economy exited recession in the second quarter of 2009 but there have been fears that the return of deflation could stall growth within the economy.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

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