According to the latest news, Japan’s export increased the most since 2010 in April. Meanwhile, capital spending perked up on increasing global demand for cars and electronics. It lifted expectations that an improvement in trade could help lead Japan’s economy back to growth.
Additionally, brightening the outlook, confidence among the nation’s manufacturers reached a more than two-year high in May on the back of solid overseas orders.
Notably, global appetite for cars and electronics has boosted since 2020, spurred by a recovery in the U.S. and Chinese economies, Japan’s key markets. However, global chip shortages put a drag on overseas shipments in the last months.
According to official data, exports gained 38% in April from a year earlier, following a 16.1% rise in March. That was the fastest rise since April 2010, driven by U.S.-bound shipments of cars and car parts and Chinese demand for chip-making equipment.
Remarkably, exports to China, Japan’s biggest trading partner, increased by 33.9% year-on-year in April, led by shipments of chip-making equipment, hybrid cars, and scrap copper.
U.S.-bound exports gained 45.1% in the year to April, the fastest rise since 2010, on the back of demand for automobiles, car parts, and ship engines.
Japan’s core machinery orders gained 3.7% in March
Meanwhile, the Cabinet Office data revealed Japan’s core machinery orders, an indicator of capital spending in the coming six to nine months, increased 3.7% in March from the previous month.
Japan’s economy fell back into a slump in the first quarter. Meanwhile, economists have sharply revised down estimates for growth this quarter as emergency curbs hobble consumer spending that makes up more than half the economy.
According to Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank, export growth is welcome for the Japanese economy, but that doesn’t imply the whole of Japan can benefit from it.
He added that important is a recovery in service-sector activity supported by progress on COVID-19 vaccination.