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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (24386)	2/25/2005 11:26:16 AM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Japan trade surplus shrinks Tamawa Kadoya February 24, 2005 Japan's trade surplus shrank for the second time in the past five months on a year-on-year basis in January, highlighting slow demand for high-tech goods that has helped to push the economy into its fourth recession in a decade. Exports to the United States fell for the first time in eight months, by 1.6 percent, but those to China accelerated by 13.4 percent after 8.7 percent growth the previous month. The overall trade surplus narrowed 59.9 percent from a year earlier to 200.8 billion yen (HK$15.04 billion) - far worse than forecasts that had centered on a rise of 1.5 percent. The surplus also dropped from the previous month, shrinking 9.6 percent on a seasonally adjusted basis. This was the fourth straight monthly decline. ``Global adjustments in the information technology sectors continue and exports will remain in a flat trend for a while,'' said Yoshiki Shinke at Dai-ichi Life Research Institute. Exports rose just 3.2 percent in January from a year earlier to 4.4126 trillion yen. Shipments of audio-visual equipment such as televisions fell but steel product exports gained, reflecting booming demand in China. Imports rose 11.6 percent to 4.2118 trillion yen, with higher prices for raw materials such as coal, oil and metals accounting for much of the rise. Exports in January tend to be affected by seasonal factors such as the New Year holidays, said an official at the ministry of finance, ``so the percentage decline is quite sharp. But it can be said that the trade balance last year was unusually good.'' Some economists said the rise in imports could suggest a recovery in domestic demand that could help the economy in the months ahead. ``I'm not pessimistic about the future course of the economy,'' said Mamoru Yamazaki, chief economist at Barclays Capital. ``We're expecting steady growth in the US and China, and if that's correct we can expect a rebound in exports in the second quarter.'' Others were not so sure. ``Steel exports to Asia are still doing well.'' said Tadashi Yamamoto, an economist at Bank of Tokyo-Mitsubishi. ``But exports of IT-related products remain weak and are unlikely to recover during the first half of this year.'' Exports, which account for some 10 percent of gross domestic product, have been the leading engine of growth for Japan, showing a double-digit expansion since the current recovery cycle began in mid-2003. China, including Hong Kong, has been the key market, accounting for a third of the rise in Japanese exports during the course of the expansion, supported by strong demand from other Asian countries, according to the Organisation for Economic Cooperation and Development. But the recent slowdown in demand has hurt both exports and output. In January, exports declined on a volume basis for the first time in 19 months, falling 3.2 percent from the year-earlier period. Net exports dragged down the economy in the last three months of 2004 for the second straight quarter. Japan's economy contracted 0.1 percent in the three months to December from the previous quarter, the third quarter of contraction. Two consecutive quarters of contraction qualifies as a recession. Data last month showed China, including Hong Kong, became Japan's biggest trading partner in 2004, replacing the United States for the first time. Overall, however, Japan's trade surplus to Asia declined for the third straight month in January. REUTERS thestandard.com.hk