Abenomics describes the plans of Japanese Prime Minister Shinzo Abe to revive growth in the world’s third largest economy, which is struggling to find traction under the impact of a strong yen and stubborn deflation.
Weaker yen sees Japan exports hit 3-year high
Sales of cars, electronics to the US drive growth but world's third-largest economy books trade deficit in July as imports rise on dearer oil
Japanese exports rose last month at the fastest annual pace in nearly three years as the benefits of a weak yen finally started to take hold, and brisk sales of cars and electronics to the United States, Asia and Europe showed a recovery in overseas demand.
Japan still ran its third-biggest trade deficit on record at 1.02 trillion yen (HK$81 billion), as the weak yen and rising oil prices made energy imports ever more expensive, which may drag on corporate profits ahead.
Analysts expect the world's third-largest economy to head for a steady recovery, although some warn of risks such as the continued slowdown in China, Japan's biggest trading partner.
"As a trend, exports are recovering and will keep growing because the positive effect of the weak yen will strengthen in coming months," said Yoshiki Shinke, the chief economist at Dai-ichi Life Research Institute.
"Hopefully, that will offset risks, notably the possibility that China's economic recovery will remain weak."
The 12.2 per cent rise in exports in the past 12 months was less than a median estimate for a 13.1 per cent increase but was the biggest gain since December 2010, data released by the Ministry of Finance yesterday showed.
Exports to the US, Asia and Europe all accelerated. Export volume also rose for the first time in over a year, offering more evidence that overseas demand could strengthen further.
"We expect exports to continue to recover," said Hiroaki Muto, an economist at Sumitomo Mitsui Asset Management. "The details are encouraging because you can see that exports to Japan's main markets are bouncing back."
A depreciation of about 20 per cent in the yen since November last year, when markets began expecting the aggressive easing in monetary policy undertaken by the Bank of Japan in April, has boosted the competitiveness of the export-driven economy.
Toyota Motor was among those that benefited from a weak yen and a pickup in overseas demand, posting a near-record quarterly profit.
Japan's economy expanded for the third consecutive quarter to June as Prime Minister Shinzo Abe's reflationary policies brightened sentiment and bolstered personal consumption.
But growth slowed in the second quarter on an unexpected fall in capital expenditure, casting doubt on whether the economy can withstand the pain from a planned sales tax rise in April next year.
Policymakers see export growth as key in gauging the economic outlook and hope that global growth will accelerate enough to make up for the expected downturn in personal spending after the tax increase.
For now, the signs are positive.
Exports to the US, which bought the most Japanese goods last month, rose 18.4 per cent, faster than in June and marking the seventh straight month of gains. Exports to China grew 9.5 per cent.