Japan’s exports rise at fastest rate in two years
Growth gives government momentum to steer economy through rough markets
Japan’s exports rose in May at the fastest annual rate in more than two years with the help of a weak yen and a moderate pick-up in global demand, boding well for the government’s efforts to steer the economy through market turbulence.
The faster-than-expected rise is welcome news for prime minister Shinzo Abe after recent a sell-off in stocks, volatility in bonds and a spike in the yen raised concerns about the outlook for his economic recipe of radical monetary easing, fiscal stimulus and pro-growth policies.
Calculated in yen, exports rose 10.1 per cent in the year to May, compared with analysts’ 6.5 per cent forecast in a Reuters poll, rising for a third straight month and at the fastest pace since December 2010, finance ministry data showed today.
The weaker yen also boosted the energy-heavy import bill, which rose 10 per cent from a year earlier, leaving Japan with a 994 billion yen (€7.8 billion) trade deficit, but economists said the net effect of the yen’s retreat remained positive.
They argue that higher export revenues translate into higher exporter earnings and consequently more investment and workers’ bonuses, with indirect benefits for the broader economy even if costlier imports also affect businesses and consumers.
Given the blue-chip index in Japan’s stock market is heavy on exporters, Mr Abe’s government also hopes that the export windfall will shore up general business and consumer confidence.
Keeping general sentiment buoyant is seen as crucial to spurring consumption and investment as policymakers aim to pull Japan out of its liquidity trap and end nearly two decades of economic stagnation and deflation.