Japan economy gets fresh impetus as exports log biggest rise in three years

Wed Nov 20, 2013 1:37am EST
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By Tetsushi Kajimoto

TOKYO (Reuters) - A surge in car shipments spurred Japanese exports to their biggest annual increase in three years in October, suggesting a gradual pick up in global demand will help underwrite a sustainable recovery in the world's third-largest economy.

The 18.6 percent increase in exports in the year to October blew past the median market forecast for a 16.5 percent rise and accelerated from a 11.5 percent gain in September, data by the Ministry of Finance showed on Wednesday.

Significantly, exports also rebounded in volume terms, rising 4.4 percent from a year earlier, in a sign the global economy is gradually recovering mainly on strength in advanced nations.

Sluggish exports have been a source of concern for policymakers as shipment volume has struggled to pick up despite a weak yen this year due to slowdown in emerging economies, which faced capital outflows on expectations the U.S. Federal Reserve would soon roll back its massive monetary stimulus.

While the yen has fallen around 14 percent against the dollar in 2013, exports growth has largely disappointed early expectations.

The Japanese economy has been humming along nicely this year on the back of Prime Minister Shinzo Abe's massive monetary and fiscal expansionary policies, dubbed Abenomics. Still, headwinds from weak capital spending and depressed global demand have somewhat clouded the outlook.

The October data should provide some relief for the government, which is hoping a recovery in overseas demand will cushion the blow from a sales tax hike next April, which could crimp private consumption

"U.S. private-sector demand remains strong and European economies appear to be bottoming out. If advanced economies recover, Japanese exports can rise more," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.   Continued...

A man rides a bicycle past containers at a port in Tokyo October 21, 2013. REUTERS/Issei Kato