Japanese exports lose pace

07-27-2010 07:42

Japanese exports surged in June but the increase was less than in the previous period. This resulted in speculations about the strength of the recovery. Japan’s finance ministry reported that exports rose by 27.7% to €52 trillion. Nevertheless, analysts stated that exports would continue to lose pace in the next months. The higher rate of the Yen would affect Japan’s exports in the coming months.

South Korea’s economic growth

Separate data demonstrate that South Korea’s economic growth lost momentum from April to June. Gross domestic product surged by 1.5% in the second quarter, while it rose by 2.1% in the first quarter. GDP figures exceeded analysts’ expectations regardless of the deceleration.

Japanese exports

Japanese exports to the United Sates climbed by 21.1%. Japan’s exports to Asia increased by 31.7%. Imports surged less than exports, rising 26.1% to 5.18 trillion Yen. The Japanese trade surplus increased to €6.11 billion. “After the financial slump we experienced a sharp, V-shaped improvement in exports,” according to Atsushi Kamio, economist at the Daiwa Research Institute. “The recovery is now losing pace.”

Budget deficits

Governments all over the world presented severe measures to decrease budget deficits. Analysts stated that these measures would affect the Japanese exports in the second half of this year. A stronger Yen could make things worse.

Strong Yen

Junko Nishioka, chief economist at RBS Securities in Japan, commented: “We expect that the strong Yen will affect the Japanese economy in the third quarter. Exports to Asia will probably stabilize or decrease and will not increase export volumes. The uncertain prospects for the American economy will boost the Japanese Yen.”

Japan’s economy

However, the prospects for Japan’s economy are still dim. In June, Japan’s prime minister Naoto Kan stated that the nation may collapse due to the enormous debts. The Japanese central bank also presented a plan with a total value of three trillion Yen. These low interest loans should boost the improvement of the Japanese economy.