Japan’s exports recover in August

| September 21, 2011 | 0 Comments
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Official figures today revealed Japan’s exports rose in August for the first time in six months – suggesting the world’s third largest economy is continuing its recovery from the devastating earthquake and tsunami which struck in March.

According to the Ministry of Finance, exports were 2.8% higher last month on an annual basis but this was much less than the 8% rise expected by analysts.

The figures suggest the strong yen continues to hurt Japan’s manufacturers – it is currently hovering around 76.30 to the US dollar – dangerously close to its post-war high of 75.95 yen seen last month.

The yen has been appreciating for some time as global investors see it as a safe haven at a time of economic uncertainty.

However, it has implications and it is forcing manufacturers to consider relocating and some have even suggested moving their operations overseas.

Exports helped the economy recover from recession earlier than its counterparts more than two years ago but the twin disasters disrupted supply chains and forced some of Japan’s largest exporters to halt production.

In the meantime, imports surged 19.2% on an annual basis, due to hikes in oil prices.

As a result, the economy posted a huge trade deficit of 775.3 billion yen – the biggest since records began in 1979.

Last week, the Cabinet Office revealed the Japanese economy performed worse than originally thought in the April to June period.

Gross Domestic Product (GDP) contracted by 2.1% on an annual basis in the three-month period, compared with an initial estimate of 1.3%.

The economy is currently in recession and has now contracted for three consecutive quarters.

Japan lost its place as the world’s second largest economy to China last year and it faces several headwinds including years of deflation and a mountain of debt.

Debt currently stands at almost twice the country’s annual economic output and is the highest of any industrialised nation.

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