Japan’s exports posted strong growth in April, but that was not enough to offset the country’s import bill, which set a record.
Exports increased by 12.5% in April compared to the previous year, Ministry of Finance the data showed, led by car shipments to the United States and beating a 13.8% increase expected by economists in a Reuters poll. It follows a 14.7% rise in March.
But imports rose 28.2% in the year to April, against a median estimate of a 35.0% increase, as a weaker yen helped boost already rising world prices. raw material.
However, the outlook for a private demand-led recovery was bolstered by a capital spending indicator which posted its first monthly gain in three months.
Thursday’s mixed data followed the yen’s fall to its lowest level in two decades from 131 to the dollar earlier in May, fueling fears of a deterioration in the terms of trade and adding financial burdens on the resource-poor economy as import costs soar.
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Yen weakness has less impact
A weak yen, once seen as a boon to Japan’s export-driven economy, now has less impact as shipments decline, given Japanese manufacturers’ shift to overseas production.
That resulted in a trade deficit of 839 billion yen ($6.54 billion), narrower than the median estimate of a deficit of 1.15 trillion yen, but posting a ninth consecutive month in the red.
Analysts have warned of the risks of prolonged cost inflation for the fragile economy with external factors, not domestic demand, pushing import bills higher.
Separate data showed on Thursday that Japan’s basic machinery orders rose 7.1% in March from the previous month, compared with a 3.7% increase expected by economists in a Reuters poll.
The volatile data streak, seen as a leading indicator of capital spending over the next six to nine months, provided a glimmer of hope for a domestic demand-led recovery.
The Japanese economy has contracted for the first time in two quarters during the January-March period, as Covid-19 restrictions hit the service sector and soaring commodity prices created new pressures.
- Reuters with additional editing by George Russell