Japan’s exports rose in October at their fastest pace in three years in a sign that overseas demand is picking up pace again, a Reuters survey showed, which could help ease concerns about the global economic recovery.
However, the trade balance will likely remain mired in the red with Japanese imports expected to jump as the country imports fossil fuels to offset the shuttering of its nuclear power industry.
The data may offer some comfort to policymakers as export growth so far this year has been disappointing despite a 14 percent drop in the yen against the dollar.
Still, there are lingering worries that shipments will not be strong enough to pick up the slack should Japan’s domestic demand falter — a prospect that cannot be ruled out as a national sales tax hike next year could hobble consumer spending.
Moreover, business investment remains anemic and companies are shying away from boosting wages, headwinds that threaten to undercut Japanese Prime Minister Shinzo Abe’s drive to foster durable growth through aggressive fiscal and monetary stimulus.
“Exports did not do well in July-September, but an overseas recovery and a weak yen are supporting the outlook, so we expect exports to continue to rise,” economists at Dai-Ichi Life Research Institute said.