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BOJ faces pressure to expand stimulus after Japan's exports fall
Source: Agencies |
December 20, 2012, Thursday
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JAPAN'S exports fell for a sixth straight month in November from a year earlier, adding yet more pressure on the Bank of Japan to vigorously expand monetary stimulus.
November's 953.4 billion yen (US$11.3 billion) trade deficit was the largest in 10 months as Europe's sovereign debt crisis and a sharp drop-off in exports to China hit external demand and nudged Japan's economy, the world's third-largest, into recession earlier this year.
Finance Ministry data published yesterday showed a 4.1 percent annual drop in exports, following a 6.5 percent annual decline in October, but a smaller fall than the median 5.4 percent annual decline forecast in a Reuters poll of economists.
The weak data plays into the hands of incoming Prime Minister Shinzo Abe, who has campaigned for more aggressive monetary action to energize the economy.
The data was published as the BOJ started its December meeting, and it is widely expected to announce new stimulus measures today - with the case for extra policy support stoutly reinforced by the trade figures.
Japan's exports to China fell 14.5 percent in the year to November, the sixth consecutive month of annual decline, taking the value of exports to China below that to the US.
The fall in exports is a telling sign of the damage from a territorial row between the two Asian nations this year.
Exports to Europe dropped 19.9 percent in November from the previous year, as the continent's sovereign debt crisis, high unemployment and recession took their toll.
Shipments bound for the US rose an annual 5.3 percent in November, faster than a 3.1 percent gain in the year to October, due to higher exports of cars and car parts.
However, economists say this pickup is only temporary as long as the US "fiscal cliff" threat of automatic tax hikes and spending cuts weighs on US corporate activity.
"What is worrying is that even when overseas economies start to improve, Japan's exports don't improve as much as they used to," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"Carmakers have moved a lot of production offshore. Japan's market share for electronic parts is also falling. Weak exports mean a weak economy, and this supports monetary easing."
Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co, said: "Car exports to the United States were so weak for so long that there was a little bounce, but we really need to get past the fiscal cliff. Japan's exports could recover in the first quarter of next year, but the momentum of the recovery won't be that strong."
Japan's imports rose 0.8 percent from a year earlier. The trade deficit of 953.4 billion yen in November was less than the 1.03 trillion yen deficit projected by economists, but it was the fifth straight month of deficit, and the largest since January's 1.48 trillion yen.
Japan's economy fell for a second straight quarter in the July-September period as the weak global demand tipped the export-reliant economy into a mild recession.
November's 953.4 billion yen (US$11.3 billion) trade deficit was the largest in 10 months as Europe's sovereign debt crisis and a sharp drop-off in exports to China hit external demand and nudged Japan's economy, the world's third-largest, into recession earlier this year.
Finance Ministry data published yesterday showed a 4.1 percent annual drop in exports, following a 6.5 percent annual decline in October, but a smaller fall than the median 5.4 percent annual decline forecast in a Reuters poll of economists.
The weak data plays into the hands of incoming Prime Minister Shinzo Abe, who has campaigned for more aggressive monetary action to energize the economy.
The data was published as the BOJ started its December meeting, and it is widely expected to announce new stimulus measures today - with the case for extra policy support stoutly reinforced by the trade figures.
Japan's exports to China fell 14.5 percent in the year to November, the sixth consecutive month of annual decline, taking the value of exports to China below that to the US.
The fall in exports is a telling sign of the damage from a territorial row between the two Asian nations this year.
Exports to Europe dropped 19.9 percent in November from the previous year, as the continent's sovereign debt crisis, high unemployment and recession took their toll.
Shipments bound for the US rose an annual 5.3 percent in November, faster than a 3.1 percent gain in the year to October, due to higher exports of cars and car parts.
However, economists say this pickup is only temporary as long as the US "fiscal cliff" threat of automatic tax hikes and spending cuts weighs on US corporate activity.
"What is worrying is that even when overseas economies start to improve, Japan's exports don't improve as much as they used to," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.
"Carmakers have moved a lot of production offshore. Japan's market share for electronic parts is also falling. Weak exports mean a weak economy, and this supports monetary easing."
Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management Co, said: "Car exports to the United States were so weak for so long that there was a little bounce, but we really need to get past the fiscal cliff. Japan's exports could recover in the first quarter of next year, but the momentum of the recovery won't be that strong."
Japan's imports rose 0.8 percent from a year earlier. The trade deficit of 953.4 billion yen in November was less than the 1.03 trillion yen deficit projected by economists, but it was the fifth straight month of deficit, and the largest since January's 1.48 trillion yen.
Japan's economy fell for a second straight quarter in the July-September period as the weak global demand tipped the export-reliant economy into a mild recession.
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