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TOKYO (Dow Jones)--Japanese exports rose on year for the first time 15 months in December, led by strong demand from Asia, providing a glimmer of hope that long-dormant overseas orders could recuperate further and help subdue slack demand at home.
The Ministry of Finance said Wednesday that exports rose 12.1% to Y5.413 trillion, their first on-year gain and their highest level since a streak of falls that began in October 2008. The string of declines, which included a record 49.4% plunge in February 2009, came as global trade slowed amid the financial crisis.
The better-than-expected rise in exports is likely to bolster analysts' view that the country's economic recovery, though fragile, may avoid stalling in the months ahead. Economists surveyed by Dow Jones Newswires had on average predicted an 8.6% increase. Exports have now risen 55.5% from their trough in January 2009, a MOF official said.
The return to growth in exports helped Japan's December merchandise trade balance expand to a Y545.3 billion surplus from a Y322.2 billion deficit in the same month in the previous year.
Standing out in the data were exports to China, which rose 42.8% on year to Y1.071 trillion on the back of stronger demand for organic compounds, semiconductors, other electronics components, and auto parts. Exports of automobiles themselves have also been growing as China's middle class and infrastructure expands. Auto exports in December set a new record high at Y48.852 billion, the MOF official said.
Japan has become increasingly reliant on emerging markets to sustain its economic recovery, analysts say. Bank of Japan Gov. Masaaki Shirakawa echoed this view Tuesday, saying that emerging countries' demand for Japanese goods would likely help keep the recovery intact.
Adding to that optimistic view, exports to Asia rose 31.2% to Y3.031 trillion. While a 1.4% rise in exports to the European Union to Y641.3 billion, the first gain in seventeen months, also helped, analysts said the engine for further growth will be the emerging economies.
"Japan's risk of falling into a double-dip recession is diminishing," due to such brisk demand from the country's neighbors, said Barclays Capital chief economist Kyohei Morita. "I'd say it's less than 10% now, thanks to rapid economic recovery in overseas economies especially emerging nations."
Highlighting the increasing importance of China, in particular, exports to that country topped exports to the U.S. in 2009 for the first time since the MOF began keeping comparable records in 1979, separate MOF data showed. Exports to China totaled Y10.239 trillion, while exports to the U.S. were Y8.745 trillion for that year.
"The recovery in exports to Asia," in particular to China, "has been very big since the fall-off last year," a MOF official briefing reporters said.
The severity of the falls in both exports and imports during the worst days of the global slowdown in early 2009 was underscored by the trade data for that year.
Overall exports in 2009 plunged by a record 33.1% on year to Y54.183 trillion. That means that even after December's rise, exports stand at only 70.5% of their peak level marked in March 2008 before the global recession, the MOF official said.
Imports also posted a record drop in 2009, falling 34.9% to Y51.375 trillion.
The trade balance in 2009 logged a Y2.808 trillion surplus, the data also showed.
-By Andrew Monahan, Dow Jones Newswires; 81-3-6269-2783; andrew.monahan@dowjones.com
(Takashi Mochizuki contributed to this report.)
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