World Economy

Japan Exports Continue to Rise

Japan’s economy grew at an annualized 1% in Q1 on solid exports and private consumption.Japan’s economy grew at an annualized 1% in Q1 on solid exports and private consumption.

Japan’s exports are expected to have risen for a seventh straight month in June, a Reuters poll showed on Friday, indicating that a recent revival in global demand will continue to support a moderate recovery in the world’s third-biggest economy.

The poll of 20 economists also found the Bank of Japan will keep its monetary policy settings unchanged when it meets on Wednesday and Thursday next week, reflecting the gradual uptick in growth.

Enjoying a tailwind from a weaker yen, exports are predicted to rise 9.5% year-on-year last month, the same poll showed, after a 14.9% jump in May—the fastest growth rate in more than two years.

Imports are forecast for a 14.6% rise from a year ago, up for a sixth straight month, boosted by higher oil prices and solid domestic demand. The poll tipped a resulting surplus at 484.7 billion yen ($4.27 billion), versus a trade deficit of 203.4 billion yen in May.

“A weak yen boosted exports’ value. They kept their solid trend but the momentum has slightly slowed compared with late last fiscal year,” said Taro Saito, director of economic research at NLI Research Institute.  He said Japanese exports would benefit from rising demand in key foreign markets.

The same poll found the BoJ would keep its short-term policy interest rate at minus 0.1% and the 10-year government bond yield target around zero percent at the July 19-20 review.

Japan and much of the export-reliant Asian economies have benefited from an upturn in global demand giving policy makers hope that growth will continue to pick up over the next few quarters.

Sources have told Reuters the central bank is set to raise its economic growth forecasts but cut its rosy inflation outlook next week, reinforcing expectations it will lag well behind major global central banks in dialing back its massive stimulus program.

Japan’s economy grew at an annualized 1% in the first quarter on solid exports and private consumption. But core consumer prices in May rose just 0.4% from a year earlier, some distance from the BoJ’s 2% target.

Meanwhile, Tokyo stocks edged up Friday ahead of a three-day weekend with investors awaiting a string of key meetings and data releases, while Uniqlo’s operator dropped on lower-than-expected earnings.

Next week sees the release of data on Chinese second-quarter growth, US housing starts and German business confidence, as well as policy meetings of the Bank of Japan and European Central Bank. Japan’s latest earnings season also starts next week.

Tokyo’s benchmark Nikkei 225 index inched up 0.09%, or 19.05 points, to 20,118.86—ending the week 0.95% higher. The Topix index of all first-section issues gained 0.39%, or 6.37 points, to 1,625.48—putting on 1.15% since last Friday’s close.


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