Japan’s exports improve further in December

| January 27, 2011
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Government data has today revealed Japanese exports rose for the second consecutive month in December, due to strong demand from China.

Exports grew 13% in December on an annual basis – higher than the 9.1% growth reported in November.

Exports to China rose by 20.1%, while those to the US grew 16.5%.

The data will provide hope for the world’s third largest economy as exports are a crucial driver for economic growth and helped bring the economy out of recession much sooner than its counterparts throughout the world.

There have been concerns of late about the recovery in Japan. Exports slowed significantly between February and October – partly due to a strong yen – which weakens demand.

Another major problem for the economy is deflation.

Official figures show Japanese core consumer prices fell 0.5% in December compared with a year ago – representing the 22nd consecutive monthly decline that the economy has been in deflation.

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.

In addition, the economy is battling with soaring debt levels. A recent report suggested that Government debt is to reach 204.2% of GDP.

This compares with 136.8% for Greece and 112.7% – according to estimates from the OECD.

Japanese debt is the highest of any industrialised nation.

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