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November 26, 2009

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Home » Business » Economy

China deals aid Japan's exports

JAPANESE exports fell in October by the smallest amount in a year, the government said yesterday, as stimulus spending lifted demand - particularly from China and the rest of Asia.

But economists warned that Japan's export-reliant economy remains weak and global demand for its cars, consumer gadgets and other mainstay products could slump again as the effects of government stimulus measures fade.

"A global economic recovery is sustained by worldwide stimulus measures, and the recovery remains fragile. Once those stimulus measures are gone, global demand could cool down again," said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

Exports dropped 23.2 percent from a year earlier to 5.3 trillion yen (US$60 billion), the 13th straight decline, the Ministry of Finance said. In September, exports fell 30.6 percent. Back in February, they plunged by nearly half.

Shipments of automobiles were down 37.2 percent and exports of steel were off 38 percent - both an improvement from previous months yet also showing that big Japanese employers such as Toyota Motor Corp and Nippon Steel Corp still face trying times.

Imports in October fell 35.6 percent to 4.5 trillion yen, resulting in a trade surplus of 807.1 billion yen.

Japan's economy, the world's second-largest, appears to be at a critical juncture as policy makers try to sustain a recovery from the nation's worst recession since World War II.

Last week, reports showed the economy expanded at an annualized pace of 4.8 percent in the third quarter, the strongest growth in more than two years. Industrial production has also been recovering after plunging earlier this year in the wake of the global financial crisis.

But Japan's jobless rate is still a high 5.3 percent, and salaries and prices are falling.

Such deflation may sound positive, but it can erode corporate profits, cause companies to cut wages and also prompt consumers to hold off on purchases on hopes that prices will fall further.

Exports to the rest of Asia, while still down, showed the biggest improvement. They fell 15 percent from a year earlier - the smallest drop since last October - after declining 30 to 40 percent during the first half of the year.

Asia has become increasingly vital to Japan's economy. Exports to the rest of Asia totaled 2.88 trillion yen - more than those to the United States and EU combined.


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