July 25, 2012 / 12:50 AM / 5 years ago

UPDATE 2-Japan exports post first fall in 4 months as Europe, China slow

 * June exports -2.3 pct y/y vs forecast -3.0 pct
 * Trade balance +61.7 bln yen vs -135.0 bln yen f'cast
 * Exports to Europe fall at fastest pace in almost 3 yrs

 (Adds details on exports to Europe, China)
 By Stanley White
 TOKYO, July 25 (Reuters) - Japan's exports fell in June from
a year earlier, the first decline in four months, as a slowdown
in Europe, China and other emerging markets weighed on demand
for Japanese goods.
 The 2.3 percent annual decline in exports was slightly less
than economists' median forecast of a 3.0 percent annual drop,
in a troubling sign for Japan's recovery from a devastating
earthquake, tsunami and nuclear disaster last year. 
 Japan's domestic demand, fueled by reconstruction and a
pick-up in consumer spending, has supported growth for much of
this year but weakening overseas demand could slow the economy,
bolstering the case for new policy steps to support growth.
 "Exports remain sluggish and you can't expect much from
external demand to drive the Japanese economy in the latter half
of this fiscal year (to next March) when private consumption is
likely to lose momentum as subsidies for low-emission cars run
out of money," said Yasuo Yamamoto, a senior economist at Mizuho
Research Institute.
 "I don't think the Japanese economy is sliding back into
recession, but that possibility cannot be totally ruled out
depending on developments in Europe's crisis and slowdown in the
U.S. and Chinese economy," he said.
 
 The trade balance in June swung to a surplus of 61.7 billion
yen ($788.80 million) against a projected deficit of 135.0
billion yen as imports fell an annual 2.2 percent due to a
decline in oil prices.
 The decline in imports was the first in 2-1/2 years and
compares with the median forecast for a 1.2 percent annual
increase.
 Japan recorded its biggest ever trade deficit of 1.481
trillion yen in January. 
 Exports to Europe in June tumbled by 21.3 percent from a
year earlier, the fastest decline since a 29.0 fall in the year
to October 2009 as Europe's sovereign debt crisis takes its
toll.
 Exports to China, Japan's largest trading partner, fell 7.3
percent in the year to June, the biggest decline since a 14.0
percent annual fall in February, due to lower shipments of steel
and heavy machinery.
 Japan's economy is still expected to outperform most other
developed nations this year thanks to solid domestic demand, but
analysts have slashed forecasts for factory output as the global
slowdown becomes more pronounced, according to a Reuters poll
conducted earlier this month. 
 Japan's economy, the world's third-largest, is set to grow
2.2 percent in the year to next March, according to a Reuters
poll of economists, slightly slower than the 2.3 percent pace
seen in a similar survey in June.
 China's economy is expected to recover modestly in the third
quarter after marking its slowest pace of growth in three years
in the second quarter as Europe's sovereign debt crisis weighed
on exports.
 There are growing worries that Spain may have to seek a
bailout following media reports that half a dozen regional
governments could request state aid to pay off their debts.
($1 = 78.2200 Japanese yen)

 (Editing by Tomasz Janowski and Jacqueline Wong)
 

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