Japan's annual exports in Jan jumped most since 2013

TOKYO: Japan's annual exports in January jumped the most since late 2013 in an encouraging sign a weak yen is finally boosting the nation’s all-important export engine and helping the economy crawl out of a recession.

The 17.0 percent year-on-year gain in exports marked the fifth straight month of increase, supported by brisk shipments of cars to the United States and of electronics parts to Asia, data by the Ministry of Finance showed.

Policymakers hope a pickup in exports, which had been a soft spot in the economy despite a weak yen , and cheaper oil prices will spur firms to spend more on wages and investment, leading to a virtuous growth cycle.

"There's a risk that low global growth could weigh on exports but I expect the U.S. economy to offset sluggish demand elsewhere," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"Japanese exporters have gained hefty profits due to a weak yen so they have a lot of room now to lower exporting prices to give their products a competitive edge in overseas markets."

On Wednesday, the Bank of Japan maintained its massive monetary stimulus at a policy setting meeting, and revised up its view on output and exports as it stuck to its assessment that the world's third largest economy is recovering moderately.

The export figures follow this week's GDP report which confirmed the economy pulled out of a recession in the fourth quarter, although annualized growth of 2.2 percent was well short of forecasts reflecting the lingering effects of a sales tax hike last year. The one glimmer of hope was that external demand added 0.2 percentage point to growth.

The export data compared with a 11.9 percent annual gain expected by economists in a Reuters poll, following a 12.8 percent rise in December.

Export volume grew 11.2 percent, the fastest gain since 2010.

Imports fell 9.0 percent in the year to January, due to slumping oil prices, versus the forecast of a 4.8 percent decrease. That brought the trade balance to a deficit of 1.18 trillion yen ($9.94 billion), down 57.9 percent from a year earlier, but still a record run of shortfalls stretching 31 months.

Exports to the United States rose 16.5 percent year-on-year in January, while those to China grew 20.8 percent, likely driven by a rush in demand before the Chinese New Year holidays.

Shipments to Asia, which account for more than half of Japanese exports, grew 22.7 percent year-on-year.

($1 = 118.6900 yen)- Reuters