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Trade surplus grew in June for first time in 20 months


Latest update : 2009-07-23

The latest Japan's trade figures show that the second largest economy in the world is in the recovery process. The country's trade surplus was of 5.4 billion dollars, almost five time more than last year.

AFP - Japan's trade surplus grew in June for the first time in 20 months as an export slump eased, data showed Thursday, supporting hopes the world's number two economy is crawling towards a recovery.

Exports exceeded imports for a fifth straight month, giving a vital boost to a country whose heavy dependence on overseas demand left it highly exposed to the global economic downturn.

The surplus jumped roughly five-fold to 508.0 billion yen (5.4 billion dollars), from 104.1 billion yen a year earlier, the finance ministry reported.

The year-on-year improvement in the trade balance, the first since October 2007, reflected a smaller decline in exports and a sharp fall in imports.

"Exports, which bottomed in February, continue their moderate recovery trend, led by demand from Asia," said Barclays Capital economist Kyohei Morita.

Exports sank 35.7 percent in June from a year earlier to 4.60 trillion yen, marking an improvement after a 40.9 percent plunge in May. Imports dived 41.9 percent to 4.09 trillion yen.

Japan sank into recession in the second quarter of 2008 as consumers around the world stopped buying the cars, high-tech goods and other exports that drove the country's recovery from its 1990s recession.

Analysts say the worst of the downturn now appears to be over for Asia's biggest economy, noting that US-bound exports had shown signs of stabilising.

"What had been most worrying were shipments to the United States, but they shrank less than before," said Daiwa Institute of Research economist Hiroshi Watanabe.

He said a credit crunch that had squeezed demand for cars and other products was now easing, supporting overseas demand for Japanese goods.

Japan posted a trade surplus of 3.9 billion yen with China, the first black ink in four months, as a strong rebound in the Asian economic powerhouse offers a ray of hope for ailing developed economies.

"The surge in China's property construction assures us that the recovery in exports to China should be sustainable through 2010," analysts at the investment bank UBS wrote in a report.

For the six months to June, Japan posted a trade surplus of 8.3 billion yen, down 99.7 percent from a year earlier but marking a turnaround from a deficit of 766.3 billion yen in the second half of 2008.

Government stimulus spending efforts are gradually helping to boost demand for Japanese goods, but the recovery is patchy, said Hideyuki Araki, an economist at Resona Research Institute.

"It is mostly large companies that are benefiting from other countries' economic packages and smaller firms are still struggling. Overall production activity is recovering but lacks strength," he said.

Japan's economy shrank at an annualised pace of 14.2 percent in the first quarter of 2009, the worst performance on record, but recent data have indicated that exports and industrial production have begun to rebound.

There are fears, however, that the export recovery could stall once the effects of government stimulus packages fade.

"When the effects run their course, there may be another correction," warned Maiko Noguchi, economist at Daiwa Securities SMBC.

Date created : 2009-07-23