TOKYO, Aug 25 - Japan's customs-cleared trade surplus expanded in July as exports grew due to a recovery in U.S. consumer demand and as the impact of the SARS virus receded. The surplus rose 7.3 percent from a year earlier to 799.2 billion yen ($6.77 billion), Ministry of Finance data showed on Monday. That was slightly less than forecast by economists in a poll, which saw a median surplus of 890 billion yen. The surplus in July was up 3.5 percent from a month earlier at 753.7 billion yen on a seasonally adjusted basis. Japan's economy, while posting growth for the sixth straight quarter in April-June, remains heavily dependent on exports as demand at home slowly picks up.
Exports accounted for one-third of a rise in gross domestic product (GDP) for the April-June quarter. April-June GDP grew a real 0.6 percent from the previous quarter, or an annualised 2.3 percent. Exports gained in July after a dip in June, and were up 5.6 percent from a year earlier, and up 1.1 percent from a month earlier on a seasonally adjusted basis. Imports were up 5.3 percent year-on-year and were up 0.6 percent month-on-month. The surplus with the United States, Japan's largest trading partner, was down 6.2 percent in July from a year earlier at 570.1 billion yen, but that drop was smaller than a 21.7 percent fall in June. Most economists said they felt the fall was temporary and saw a rebound ahead.
"We do not expect weakness in U.S. demand to be long-lasting because we are forecasting the U.S. corporate sector -- labour and capital spending -- will gradually recover," said Toshikimi Kaneki, an economist at Sumitomo Trust and Banking Co. A MOF official concurred, saying exports to the United States have been lacklustre but could pick up if the U.S. economy recovers later this year.
ASIA ROBUST
With the impact from the SARS virus receding, exports to Asia as a whole rose 12.7 percent, compared with a 3.8 percent increase in the previous month. Gains in exports had shrunk for four straight months. Both exports and imports to Asia as a whole were the second-highest on record in terms of value, the MOF said. Exports were worth 2.1720 trillion yen, up 12.7 percent, while imports came to 1.7072 trillion yen, up 11.6 percent. Exports to China were at a record high at 588 billion yen, mostly for parts for mobile phones and home videogame players. Exports to China have been firm despite the impact of the SARS virus as Japanese companies shift production overseas, the MOF said. Signs of a rebound in overseas economies have raised hopes among policymakers that Japan's export-led recovery will pick up later this year.
That, as well as better corporate profits and a mild rebound in capital spending, has boosted share prices and the yen, especially after GDP data showed the economy grew in April-June at the fastest rate in three quarters. "Exports to the United States should increase over the next few months. The outlook for exports to Asia is slightly less clear...but overall, I see the trade balance increasing through the rest of the year," said Yoshimasa Maruyama, an economist at Mizuho Research Institute.//