Tokyo announces surprise trade surplus in February

TOKYO - Agence France-Presse

Cars are driven through rows of cars for export parked on a wharf at a port in Kawasaki near Tokyo. Japan posted its first trade surplus in five months in February. AP photo

Japan logged a surprise trade surplus in February, offering a glimmer of hope for its moribund economy, but economists warned that with oil prices heading higher the outlook remained uncertain.

The export-led boost reversed a monster deficit in January, largely thanks to a recovering auto industry and signs that the United States’ economy is picking up even though the European market remains weak.

February’s trade surplus of 32.9 billion yen ($394 million), the first in five months, was still dwarfed by the surplus of 636.99 billion yen posted in the same period a year ago.

The dollar and the euro weakened against the yen just before the release of the monthly figures, which beat market forecasts of a 110-billion-yen deficit, according to a poll by Dow Jones Newswires and the Nikkei business daily.

“It was quite a surprise,” said Taro Saito, a senior economist at Tokyo-based NLI Research Institute. “It was not expected that the decrease in exports would shrink this much.”

One of the largest contributing factors was “the US economy, which is picking up much faster than expected,” Saito said, adding however that he expects Japan’s March trade balance to fall back into the red.

Auto exports to the U.S. rose 26.9 percent from a year earlier while sales of steel and construction and mining machinery also expanded, the official data showed.

“The auto industry is recovering quickly and doing well also in the domestic market. The upbeat U.S. economy is helping the increase in exports of cars,” Saito said.

Auto production is recovering from last year’s earthquake in northern Japan and disastrous flooding in Thailand, which pounded Japanese firms with manufacturing operations in the Southeast Asian nation.
Overall Japan’s exports fell 2.7 percent from a year earlier to 5.44 trillion yen in February on weaker demand for products including steel, medical products and semiconductors, the finance ministry data showed.

Imports increased 9.2 percent to 5.41 trillion yen in the month on strong demand for crude oil and liquid natural gas, marking the 26th consecutive month of gains in imports. Demand for fossil fuels has surged in Japan after last year’s earthquake-tsunami disaster sparked the world’s worst nuclear accident in 25 years, leading the government to take many atomic reactors offline.

Japan logged a record trade deficit of 1.48 trillion yen in January as fuel imports rose to meet electricity generation needs, with most nuclear reactors offline since the disaster.

Yasuo Yamamoto, senior economist at Mizuho Research Institute, said trade figures in March may dip back into the red on rising crude oil prices.

“The figures are likely to hover between small deficits and surpluses for the time being,” he said.
Exports have traditionally been a key engine for Japanese growth, but they were hard-hit in 2011, marred by the natural disasters, weakening global demand and a strong yen, which makes exporters products more expensive overseas.

This month, Japan’s central bank boosted a lending programme to commercial banks by about 2 trillion yen to kick-start growth and battle deflation as it said the country’s disaster-struck economy was showing signs of picking up.