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Wednesday, 18 September 2019

Japan cuts view on exports, warns of risks from overseas

Sluggish demand from emerging economies weakens Japan's exports

Reuters, Friday 22 Nov 2013
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Japan cut its view on exports for a third straight month saying they were weakening due to sluggish demand from emerging economies, in direct contrast to the central bank's more upbeat outlook about recovery in the world's third-largest economy the day before.
 
Still, the government maintained its overall assessment on the economy, which it said was on track for a moderate recovery, underpinned by firm private consumption and a pickup in capital spending on improving corporate earnings.
 
Weak exports are a source of concern for policymakers as shipment volume has struggled to grow this year amid a slowdown in emerging economies, hit by capital outflows as portfolio funds positioned for an eventual tapering of U.S. stimulus.
 
"Exports have a weak tone recently," the Cabinet Office said in its latest monthly economic report issued on Friday. Its assessment in the November report was weaker than its previous view that exports were almost flat.
 
"Exports are expected to move toward picking up ... however, the slowing down of overseas economies remains a downside risk for the Japanese economy."
 
It was the first time since 2002 that the government cut its assessment on exports for three months in a row.
 
The latest assessment comes a day after the Bank of Japan retained its assessment that the economy was recovering moderately, with BOJ Governor Haruhiko Kuroda saying the U.S. and euro zone economies were gaining strength.
 
Data on Wednesday showed signs of a pickup in exports in October, but the rebound was not strong enough to alleviate concerns about shipments, prompting the government's downgrade on the key sector.
 
"The global economy as a whole is recovering moderately but it lacks strength," a Cabinet Office official told reporters.
 
"As commodity prices decline, demand is weakening mainly among resource-producing countries," he said, citing weak demand for cars from Russia and the Middle East and for construction machinery from Brazil and Australia.
 
The government stuck to its previous assessment on other key sectors including industrial output, capital spending and private consumption.
 
It said industrial output was rising moderately, business investment showed a pickup mainly among non-manufacturers, and private consumption was seeing an improving trend.
 
The government maintained the view that Japan was approaching an end to deflation, as a key consumer price index, which excludes both food and energy, stopped falling for the first time in five years in September.
 
Asked about the chance the government could change its diagnosis on deflation, the Cabinet Office official said the government would carefully examine whether price hikes were broadening and taking root in the economy before making a judgment.
 
The central bank maintained on Thursday the massive monetary stimulus put in place in April, under which it aims to achieve 2 percent inflation in roughly two years by doubling base money through asset purchases.
 
Japan's economy slowed in July-September as exports and household spending moderated, but analysts expect growth to accelerate in the current quarter as exports recover and consumers rush purchases before a sales tax hike next April.
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