RTTNews - Japan posted a higher trade surplus in June, as exports fell at a slower pace compared to imports, signaling that the worst of the recession in the global economy may be over.
Data released Thurday by the Ministy of Finance showed that the trade surplus came in at JPY 508 billion in June, much higher than the surplus of JPY104.1 billion last year. However, it was lower than economists' expectation of a surplus of JPY610 billion.
Total exports dropped 35.7% year-on-year in June to JPY 4.59 trillion after falling 40.9% in the preceding month. Imports were down 41.9% to JPY 4.09 trillion, slower than the 42.4% drop in the preceding month. Exports have been falling since October last year, with the recent fall being the slowest since the beginning of this year. Imports having been declining since November last year.
The Asian region was the main contributor to the total trade for Japan. The country recorded a trade suplus of JPY651.7 billion with this region, as exports dropped at a slower pace of 30.1% year-on-year compared to a 31.7% fall in imports. Among individual countries in Asia, the surplus with Hong Kong was the highest at JPY241 billion. Moreover, the country posted a trade surplus of JPY 277.6 billion with the U.S, a JPY3.9 billion surplus with China and a JPY71.5 billion surplus with the Western European countries.
Among the commodity groups, exports of all commodities dropped in double-digits. Transport equipemnt, which has the highest share in exports at 22.5%, dropped 42% annually in June. Exports of electrical machinery having the second largest share of 19.9%, fell 31.6%. Among the imports, those of mineral fuels, having the highest share in the total, dropped 60.2%.
The adjusted merchandise trade balance came in at JPY438.2 billion in June. Exports rose a seasonally adjusted 1.1% to JPY4.4 trillion, while imports fell 2.1% to JPY3.9 trillion.
Earlier this month, the Bank of Japan upgraded its economic assessment for third consecutive month, citing an increase in public investment and pick-ups in exports and production.
Further, the minutes of the Bank of Japan released on Tuesday said the economy had stopped worsening, with the Board members agreeing that the economy was likely to show clear signs of levelling over time, in line with their projections made in April. However, the Board said the outlook was highly uncertain as the economic activity in the region was influenced by developments in the global economies.
This view was also highlighted by the IMF in a report earlier in the month. The IMF said that despite tentative signs of stabilization in the country and the global economy, the outlook remains uncertain. The risks to the outlook remain on the downside, reflecting the rapidly deteriorating labor market, tight financial conditions, and external uncertainties, it said.
Meanwhile, the IMF expected the Japanese economy to contract 6% this year, but expand by 1.75% next year. However, it expects inflation to continue to remian negative until 2011.
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