Bloomberg News

Japan Exports Gain Less Than Forecast on Waning World Demand

September 20, 2011

(Updates with economist comment in the fourth paragraph.)

Sept. 21 (Bloomberg) -- Japan’s exports increased less than expected as shipments of electronic parts fell, an indication that slowing growth abroad and a rising yen may weigh on the economy’s recovery.

Overseas shipments increased 2.8 percent in August from the same month a year earlier, the first increase since the March 11 earthquake, according to a Ministry of Finance report from Tokyo today. The gain was slower than lowest forecast of 22 economists surveyed by Bloomberg New, whose median estimate was for an 8 percent increase.

Analysts are predicting that the world’s third-largest economy will grow this quarter as companies restore facilities damaged by a temblor that left about 19,000 dead or missing. The resurgence in demand may be undermined by slowing overseas economies, with the International Monetary Fund cutting its global growth forecast to 4 percent for this year and next.

“Exports have been recovering since the earthquake, but they are losing momentum,” Azusa Kato, an economist at BNP Paribas Securities in Tokyo, said before the report was released. “A recession for Japan is still unlikely but decelerating exports imply any recovery will be modest.”

Analysts surveyed by Bloomberg News see gross domestic product expanding at a 5.7 percent annual pace this quarter, reversing three consecutive periods of economic contraction. The rate of expansion is then expected to slow into 2012, the economists surveyed said. Standard & Poor’s last week cut its Japan GDP forecast to close to zero from its pre-quake estimate of 1.3 percent, citing a “less robust” rebound from the disaster than it expected.

Strong Yen Steps

Prime Minister Yoshihiko Noda yesterday unveiled a plan to help companies respond to the yen’s appreciation, pledging to grant “large” subsidies for domestic construction of factories. The currency advanced to a post-World War II record of 75.95 per dollar last month.

The yen’s climb this year has prompted companies including Panasonic Corp. to announce plans to shift operations overseas. Panasonic, the world’s largest maker of rechargeable batteries, is moving the headquarters of its $57 billion procurement operation to Singapore from Osaka in the year starting April 2012, Masaaki Fujita, an executive in charge of the business, said last week.

A trade ministry survey this month showed that about 15 percent of large Japanese manufacturing companies expect operating profit to drop 20 percent or more if the yen is at 76 per dollar.

The International Monetary Fund cuts its growth forecasts this year for Japan’s largest exports markets yesterday. China’s economy will expand 9.5 percent in 2011, less than the IMF’s June estimate of 9.6 percent, while it lowered its U.S. growth projection for this year to 1.5 percent from 2.5 percent, according to the IMF’s World Economic Outlook report.

The IMF also cut its world growth forecast to 4 percent in 2011 and 2012, compared with June forecasts of 4.3 percent this year and 4.5 percent next year.

--With assistance from Minh Bui in Tokyo. Editors: Lily Nonomiya, Ken McCallum

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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