US slowdown depresses Japan's trade surplus

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Wednesday, March 21 11:47 AM SGT

US slowdown depresses Japan's trade surplus TOKYO, March 21 (AFP) - The US economic slowdown hit Japan's trade surplus hard in February, depressing it by 25.4 percent year-on-year to 879.4 billion yen (7.2 billion dollars), the finance ministry said Wednesday.

"The trade surplus tumbled as exports in the month posted modest growth while imports grew much more strongly," said a ministry official.

"Reflecting the US economic slowdown, growth in US-bound shipments was weak, directly hurting our surplus," he said.

Overall exports grew 1.5 percent in the month to 4,197.4 billion yen, while imports rose much faster 12.2 percent to 3,317.9 billion yen, the ministry said.

Japan's trade surplus with the United States slipped 2.8 percent to 667.4 billion yen, with exports only up 3.9 percent to 1,301.8 billion yen and imports rising a robust 12.0 percent to 634.4 billion yen.

"As the faltering US economy is hurting economies in Asia and Europe, Japanese exports to these regions were also stagnant in the month," said Satoru Ogasawara, economist at Credit Suisse First Boston.

"What we see here is a global economic slump caused by the US economic slowdown."

The trade surplus with the European Union declined 16.4 percent to 308.7 billion yen, with exports falling 1.1 percent to 735.3 billion yen and imports rising 14.0 percent to 426.6 billion yen.

With the rest of Asia, Japan's trade surplus tumbled 28.3 percent to 289.5 billion yen, with exports rising 3.9 percent to 1,644.3 billion yen and imports going up 15.0 percent to 1,354.8 billion yen.

The overall import growth was owing to an influx of cheap technology goods and a weakening yen, rather than a recovery in Japan's long-depressed domestic demand, analysts said.

"Many Japanese companies are waging a severe price battle amid deflation. They make hi-tech products overseas more cheaply and import them back to Japan," said Hidehiko Fujii, senior economist at the Japan Research Institute.

"Therefore, the increase (in imports) does not necessarily mean a recovery in domestic consumption," he said.

The yen was more than eight percent weaker against the dollar in February compared to a year earlier, adding to pressure on the trade surplus by making imports more expensive.

"Although imports rose a modest 2.8 percent year-on-year in terms of quantity, they surged 12.2 percent in value terms because of the weak yen," Fujii said.

"As the yen has kept falling, the trend we are going to see for now is robust imports far surpassing gains in exports."

--------------------------------------------------------------------------------http://asia.dailynews.yahoo.com/headlines/business/article.html?s=asia/headlines/010321/business/afp/US_slowdown_depresses_Japan_s_trade_surplus.html

-- Carl Jenkins (somewherepress@aol.com), March 21, 2001


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