UPDATE 1-Japan exports show double-dip recession less likely
* Economists say return to recession unlikely due to exports
* Japan’s domestic demand still a worry for the economy
By Rie Ishiguro
TOKYO, Dec 21 (Reuters) – Japan’s exports rose by the most in seven years in November due to solid Asian demand, reducing worries that the Japanese economy will fall into another recession next year.
The pace of decline for exports compared to the same month a year earlier also slowed substantially from October, as stimulus measures in overseas economies bolstered demand for Japanese goods.
Strong growth in China and the rest of Asia is likely to continue to support Japan’s export growth next year, economists say, and that will likely be enough to compensate for Japan’s weak domestic demand and prevent the economy from experiencing a double dip.
“I’d say the recovery in exports so far this year has been close to the best scenario we had thought of at the beginning of the year,” said Junko Nishioka, chief economist at RBS Securities in Tokyo.
“Given that exports are growing solidly despite the yen’s rise last month, we don’t need to be overly pessimistic about growth. The economy will perhaps slow down early next year but a recession is unlikely.”
Exports rose 4.9 percent in November from the previous month, seasonally adjusted figures from the Ministry of Finance showed on Monday.
Compared with a year ago, Japan’s exports fell 6.2 percent in November, less than the median market forecast for a 6.5 percent decline and slower than a 23.2 percent annual decline the previous month, the data showed.
Exports to Asia, which account for more than half of Japan’s total exports, rose 4.7 percent from a year earlier, posting the first annual rise since September last year.
Exports to China rose 7.8 percent from a year earlier, while exports to the United States fell 7.9 percent.
Japan logged a trade surplus of 373.9 billion yen ($4.13 billion), bigger than the median estimate for a 344.5 billion yen surplus. [JPTBAL=ECI]
The rebound in exports has been a major driving force behind Japan’s recovery.
But gross domestic product growth in the three months to September was slashed to just 0.3 percent, data on Dec. 9 showed, much slower than the initial estimate of 1.2 percent.
Although few economists expect another recession now that the country has pulled out of its worst downturn in decades, they say Japan’s economy will likely grow very slowly in the first half of next year. [ECILT/JP]
Worries that the economy could hit a soft spot early next year have prompted policy actions by the government and the BOJ, even as much of the world is unwinding emergency steps taken after the financial crisis last year.
Prime Minister Yukio Hatoyama’s government, in office for three months, unveiled a stimulus package with spending of 7.2 trillion yen earlier this month as it wants to avoid recession ahead of an upper house election next year.
The Bank of Japan, under pressure from the government to take steps on deflation, has also taken new steps.
It started a new operation and also said it is not tolerating zero inflation, let alone deflation, adding many board members think of one percent inflation as an ideal. [ID:nT374859] [ID:nT289621]
Many economists say the course of Japanese economy hinges on the strength of exports, and thus ultimately the global economy, because domestic demand is structurally weak because of the ageing population.
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UPDATE 1-Japan exports show double-dip recession less likely
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