RPT-UPDATE 2-Japan car exports soar, trade gap widens on weak yen

Wed Dec 18, 2013 1:30am EST

* Nov exports +18.4 pct yr/yr vs f'cast 17.9 pct
    * Trade gap widens as weak yen pushes up imports
    * BOJ likely to keep policy steady on Friday

    By Tetsushi Kajimoto
    TOKYO, Dec 18 (Reuters) - Japan's exports rose for a ninth
consecutive month in November, led by car shipments to the
United States and China, a sign the weak yen and a recovery in
global demand are energising a major  growth driver in the
world's third-biggest economy.
    The volume of cars shipped to China and the U.S. rose by 
185 percent and 13.2 percent respectively, with the jump in
China sales occurring a year after a boycott of Japanese
products in China in a row over disputed islands in the East
China Sea.
    A steady recovery in the U.S. economy boosted demand for
Japanese cars there, with the weak yen giving a competitive edge
to exporters such as Toyota Motor Corp, analysts said.
    "The weak yen is having its effects on Japanese exports
albeit slowly, giving carmakers some room to cut prices," said
Taro Saito, senior economist at NLI Research Institute.
    "As for China, you cannot expect demand there to accelerate
from now on as the Chinese economy is heading for a stable
slowdown," Saito said.
    The 18.4 percent rise in exports matched the median estimate
of a 17.9 percent increase from a Reuters poll of economists,
and followed an 18.6 percent gain in October, Ministry of
Finance data showed on Wednesday.
    While the yen has fallen around 16 percent against the
dollar this year, export growth has so far largely fallen short
of early expectations, falling 0.2 percent in November from the
previous month on a seasonally adjusted basis.  
    "Demand from Asia helped Japanese exports in November. The
data confirmed a continued pickup in Japan's exports reflecting
a gradual recovery in global economy," said Takeshi Minami,
chief economist at Norinchukin Research Institute.
    "It was a positive reading although the pace is unlikely to
accelerate as global recovery remains tepid."
    

    
    WIDENING TRADE GAP
    The weak yen took its toll on Japan's trade balance, as it
inflated the cost of imported fuels resulting in a widening
trade gap -- a source of concern for policymakers.
    Imports rose 21.1 percent in the year to November, versus a
21.4 percent rise expected, due to the weak yen and imports of
fossil fuel to make up for energy lost since the nuclear
shutdown following 2011's Fukushima disaster.
    The resulting November trade deficit of 1.29 trillion yen
($12.56 billion), against a 1.319 trillion yen deficit expected
by economists, marked a record 17 straight months of deficits.
It was the widest deficit since January's record 1.6 trillion
yen.
    A rush to buy ahead of a national sales tax hike next April
is also boosting imports. "Japan's trade deficits may widen
further towards March next year. They will then narrow when
domestic demand peaks from April," said Norinchukin's Minami. 
    "But Japan's trade deficits will persist unless the nuclear
reactors are restarted and global recovery accelerates suddenly,
neither of which are likely to happen anytime soon."
    Weak net exports were the main reason Japan's economic
growth slowed in July to September as growth faltered in Japan's
Asian trading partners.
    Economists expect growth to pick up heading into the new
year, but many warn Japan will have to rely more on domestic
demand for growth as net exports could remain weak.
    The Bank of Japan is expected to keep monetary policy steady
at its meeting ending on Friday, encouraged by an upbeat
business sentiment survey that added to signs the BOJ's stimulus
campaign is spreading more broadly across the economy.
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