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Japan News
Japan's Export Growth Slows
From the Wall Street Journal of Tue, 16 Dec 2014 19:27:02 EST
A forklift moves a container at a transit station in Tokyo.
A forklift moves a container at a transit station in Tokyo. European Pressphoto Agency

TOKYO—Japan’s exports grew in value but fell in terms of volume in November, suggesting that sales of goods overseas cannot be relied upon to do the heavy lifting for an economy that has fallen into recession.

Many Japanese policy makers have been looking for a rise in exports, helped by the tailwind of a weaker yen, to help lift Japan’s economy at a time when domestic consumption remains sluggish following a tax increase earlier in the year.

Exports rose 4.9% in November from a year earlier, while imports decreased 1.7% on the back of lower oil prices, resulting in an ¥892 billion deficit ($7.7 billion), a record 29th consecutive monthly shortfall. The November figure compared with a median deficit forecast of ¥996 billion in a survey of economists conducted by The Wall Street Journal and the Nikkei and a ¥737 billion deficit in October.

The figures come after exports grew strongly in the past two months, raising hopes that a sharply lower yen was finally starting to lift export volumes and create a virtuous cycle of production and investment growth in Japan.

That’s a scenario targeted by Prime Minister Shinzo Abe, who reaffirmed his mandate to continue with his pro-growth Abenomics policies with a decisive election victory on Sunday. A weaker yen is a key part of Mr. Abe’s policy platform, boosting the profits of large exporters and offering them scope to price their products more competitively abroad.

But the latest figures show a 1.7% fall in export volume, indicating that while the yen is helping inflate the value of exports, it doesn’t appear to be boosting their quantity.

With the yen hitting a seven-year low earlier this month, many economists, company executives and consumers also say that the weaker currency is having negative effects on the economy, by raising the import prices of materials when consumption is already anemic.

However, the value of imports fell in November as crude prices tumbled. Oil imports in the month were down 22% from a year earlier. The fall in crude by nearly a half in the past six months has helped limit Japan’s trade deficits.

The massive trade shortfalls over the past four years are due in part to the nation’s increased dependence on fossil fuels since 2011, in the wake of the Fukushima accident that led to a shutdown of all Japan’s nuclear plants.

The other drag on the trade balance has been an offshoring of manufacturing. Mr. Abe hopes that the falling yen, which declined over 30% against the dollar in the past two years, will help curb the relocation of production facilities abroad by Japanese companies.

But the outlook remains uncertain, as China—Japan’s second largest export destination—undergoes a rapid deceleration in growth. In November, China’s imports fell 6.7% on year. The Japanese data shows a 9.8% fall in the volume of exports to China. The value of the exports grew 0.9%.

Some Japanese automobiles suffered double-digit declines in sales in China in November as new car sales grew at the slowest pace in almost two years.

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