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July 26, 2010    

Japanese exports continue to rise in June

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by Kay Murchie

The finance ministry has today revealed Japanese exports continued to rise in June, albeit at a slower pace.

Exports grew 27.7% to 5.87 trillion yen in June - the seventh straight monthly rise.

However, not only did the figure fall short of expectations of a 23.1% rise, it was also below May’s increase of 32.1%.

Meanwhile, imports surged by 26.1% to 5.18 trillion yen, driven by crude oil and non-ferrous metals.

The slowing in Japanese exports has raised concern about the strength of the recovery in the world’s second largest economy

However, according to Norio Miyagawa at Mizuho Securities Research & Consulting: “The economy has recovered to a good level. You don’t need to worry that this slowdown in exports will lead to the double-dip recession or another severe economic downturn in Japan.”

There are some concerns, though, for the economy as it continues to battle with deflation.

Deflation (where prices fall rather than increase) can be a serious threat to an economy because it deters consumers and businesses from spending in expectation of falling prices.

Deflation was a problem for Japan during its so-called “Lost Decade” in the 1990s in which the economy struggled with falling prices.

Another major issue for the Japanese economy is the country’s debt – which at nearly 230% of GDP is the highest of any industrialised nation.

The debt is the result of decades of stimulus spending and low tax receipts.

Japan’s Prime Minister, Naoto Kan, has warned of tough measures in order to reduce the debt mountain – or risk a Greece-style debt crisis.

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