Export slowdown takes shine off 'Abenomics'
Disappointing trade figures suggest prime minister's stimulus policies are faltering
Reuters in Tokyo
Japan's export growth fell well short of expectations last month, a sign that slowing demand in Asia is taking the shine off Prime Minister Shinzo Abe's stimulus policies and clouding the outlook for the country's budding economic recovery.
Some analysts said a sharp drop in export volume might offset the boost from a weak yen, and that subdued external demand could shave off some third-quarter economic growth.
Despite the weak trade data, the Bank of Japan yesterday raised its assessment for the economy, and the government said robust domestic demand would continue to support the recovery.
The yen fell 0.4 per cent to 98.10 per US dollar after the report.
"Japan's economy is making steady progress towards achieving the BOJ's 2 per cent inflation target," BOJ governor Haruhiko Kuroda told a quarterly meeting of the bank's branch managers.
Exports rose 11.5 per cent last month from a year earlier, less than a median market forecast for a 15.6 per cent increase and 14.6 per cent growth in August, trade data from the Ministry of Finance showed yesterday.
A notable slowdown was in exports to Asia, which rose just 8.2 per cent after jumping 13.5 per cent in August, suggesting weak demand in countries such as Indonesia and Thailand - big markets for carmakers - was taking a toll.
Real exports, which the BOJ calculates by stripping out the effect of price changes, fell 4.4 per cent from August.
"The positive effect of the weak yen may have run its course. We might not see a marked improvement in exports from here if the recovery in overseas growth does not pick up," said Junko Nishioka, the chief Japan economist at RBS Securities.
China's latest trade data showed a similar pattern, with exports dropping 0.3 per cent last month from a year earlier.
A poll taken before the trade data showed analysts expect Japan's economy to expand 0.6 per cent in the July-September period.
Still, policymakers are counting on overseas growth to pick up in time to make up for an expected slump in personal spending after Japan raises its sales tax in April next year.