Japanese exports rise to US and China as the currency tumbles
Thursday 20 June 2013
Japanese Prime Minister Shinzo Abe's "shock and awe" tactics to revive the world's third biggest economy paid off in May with the biggest rise in exports since 2010.
The weaker yen, driven lower by a massive acceleration of the Bank of Japan's money-printing programme to hit a new 2 per cent inflation target, helped shipments to jump 10.1 per cent year on year to ¥5.8 trillion (£39bn).
But the currency's tumble – by more than 20 per cent against the dollar and euro – also sent the cost of imports soaring for the resource-scarce nation, increasing the trade deficit by 10 per cent, claims official figures. Japan's dependence on imports such as natural gas has ballooned since most of its nuclear power plants remain closed after March 2011's tsunami, which triggered an explosion at its Fukushima plant. This has put pressure on the country's trade balance. Imports from the Middle East, primarily of crude oil and gas, were up 11.5 per cent on a year earlier last month.
Although exports to the US surged 16 per cent – where stronger growth is helping demand for Japanese products – and Chinese exports were up 8 per cent, relations with China remain tense due to a diplomatic row over disputed islands and eurozone markets remain weak. Mr Abe wants to boost public spending and implement structural reforms alongside monetary policy action as his "three arrows" to kick-start growth.
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