27 January 2003, 11:52  Japan's December Trade Surplus Falls 37% From Nov.

Tokyo, Jan. 27 (Bloomberg) -- Japanese exports fell in December for the first month in three, causing a larger-than- expected slump in the trade surplus and undermining a recovery from recession. Exports fell 7.3 percent, seasonally adjusted, from November, and imports rose 1.2 percent. The trade surplus narrowed 37 percent to 657.3 billion yen ($5.6 billion), the Ministry of Finance said. Economists expected a 782.1 billion yen surplus. The yen's almost 5 percent gain in the past three months has hurt exporters by eroding the value of their U.S. dollar sales. The prospect of a U.S.-led war in Iraq weakened the dollar and prompted consumers and companies to put off purchases of computer chips and other imported goods. ``With fears over an attack on Iraq, I can hardly foresee an upward trend among exporters,'' said Kazuaki Otsuka, who helps manage 4 billion yen at ING Mutual Funds Management Co.
The Topix index fell 1.3 percent to 850.03 at the 3 p.m. close of trading in Tokyo, led by exporters such as Sony Corp. and Canon Inc. The yen traded at 117.85 to the dollar at 3:59 p.m., compared with 117.79 in New York late Friday. The No. 245 bond, which carries a 0.9 percent coupon and matures in 2012, rose 0.139 to 100.962. Its yield dropped 1.5 basis points to 0.795 percent, matching a four-year low. A basis point is 0.01 percentage point.
A decline in exports, which account for a tenth of the economy, may sap a recovery from the third recession in a decade. Japan's economy probably shrank 0.3 percent in the fourth quarter, according to the median forecast in a Bloomberg Survey of 12 economists, after expanding 0.8 percent in the third quarter. ``Exports have clearly peaked,'' said Motomitsu Honma, an economist at the economic research division of Sumitomo Mitsui Asset Management Co. ``That's going to make growth very difficult in 2003.'' The world's No. 2 economy is ``weakening,'' the government said this month, as Japanese stocks slump and global growth slows. Industrial Production fell for a third month in November, and machinery orders, an early sign of capital spending, fell for a second month. ``There's definitely some uncertainty in the direction of the global economy,'' Casio Computer Co. spokesman Kazuhiko Ichinose said. ``We're not at the point of downgrading our sales forecasts, but it is worrying.'' Casio, the maker of G-Shock watches, relies on overseas markets for about 40 percent of sales.
Moving Abroad The trade surplus rose to 9.9 trillion yen last year, and exports rose to a record 52.1 trillion yen, led by cars, steel and imaging equipment. Exports to China rose 32 percent to a record 4.98 trillion yen. China will absorb ``an increasingly important share of Japanese trade,'' said Harry Ida, a senior analyst at financial researcher IFR. Companies such as Honda Motor Co., Japan's second-largest automaker, are moving production abroad and shipping more parts to their factories there. Honda plans to double its production capacity in China by 2004. Imports fell 0.6 percent to 42.2 trillion yen last year, led by a drop in clothing, communication equipment and crude oil, today's figures showed. From a year ago, the trade surplus rose 19.9 percent to 791 billion yen in December, the 10th straight gain. Exports rose 15.1 percent, led by cars and semiconductors.
Oil Imports
Imports rose 14.1 percent in December, the fourth straight increase, because companies such as Tokyo Electric Power Co. bought more crude oil, said Hideharu Miyashita, director of statistics at the Ministry of Finance's customs and tariff bureau. Tokyo Electric, which shut its 12th nuclear reactor today for inspections after admitting to falsifying safety documents, is firing up its oil- and gas-fired plants, Crude oil led import gains in December, rising 51.3 percent from a year ago. //www.quote.bloomberg.com

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