Japan Export Growth Slows

Japan’s exports grew at the slowest pace this year in September, a sign the country is losing its chief engine for growth as demand abroad tempers.

The report adds to signs that Japan’s export-fueled rebound is cooling, increasing pressure on Prime Minister Naoto Kan to implement his stimulus plans and on Bank of Japan Governor Masaaki Shirakawa to come up with fresh ways to support the economy. Manufacturers including Honda Motor Co. are also grappling with the country’s appreciating currency, which has continued to strengthen even after the government intervened in the foreign-exchange market last month.

The Japanese currency has gained more than 14 percent against the dollar this year, threatening to erode exporters’ repatriated earnings from abroad. It traded at 81.10 at 10:29 a.m. in Tokyo compared with 81.33 before the report was released.

Imports climbed 9.9 percent from a year earlier and the trade surplus rose to 797 billion yen ($9.8 billion), today’s report showed.

Japan’s exporters can remain profitable as long as yen trades at 92.90 per dollar or weaker, according to the Cabinet Office’s annual survey of companies. The government intervened in the foreign-exchange market for the first time since 2004 last month on concern the currency’s advances risk derailing the export-driven recovery.

The value of exports to China, Japan’s biggest market, climbed 10.3 percent in September from a year earlier, compared with 18.5 percent increase in August. Data last week showed China’s economy grew at the slowest pace in a year as inflation accelerated. Exports to the U.S. gained 10.4 percent and shipments to Europe increased 11.2 percent.

Kan’s Cabinet endorsed a 5.1 trillion yen stimulus that will help local governments and small businesses cope with the advancing currency, and the central bank on Oct. 5 unexpectedly cut its benchmark interest rate and created an asset-purchasing fund to support the expansion.

Japan Export Growth Slows

TradingEconomics.com, Bloomberg
10/31/2010 6:57:57 AM